PayPal targets UK mobile payments

25 February 2013

LONDON: PayPal, the online payments company, plans to launch a mobile chip-and-pin service in the UK later this year.

The service, called PayPal Here, is aimed at small businesses and mobile traders who currently do not take payments by card and cannot afford the chip-and-pin machines offered by retail banks.

"Cash and cheques have served us well over the years but businesses that rely on them risk missing valuable sales," said Cameron McLean, managing director of PayPal UK.

The new service will be offered on a no–contract basis with payments made per transaction.

Trials have already begun in London of the new device, which connects wirelessly to the free PayPal app on Android and Apple smartphones.

Commentators suggested to the Financial Times that PayPal was not aiming to make money from the device – a rival offering from iZettle, for example, charges merchants £49 for the reader – but rather to widen the "PayPal ecosystem" and that of its parent company eBay.

Recent research by the UK Payments Council noted how quickly the way Britons pay for goods and services has altered in recent years.

As recently as 2001, 40% of home rental payments were made in cash and 43% of retail spending, by value, used notes and coins. By 2011, landlords collected a quarter of rents in cash, while only 30% of shopping was paid for in this way, and most of that was in payments of under £5.

Debit cards and direct debits have been largely responsible for this change, and the council suggests that the current increase in contactless payment technology using cards may soon be overtaken by the use of mobile phones instead.

Adrian Kamellard, chief executive of the Payments Council said: "We scarcely notice the steady changes in the way we pay, yet someone in their thirties today will see more change in their lifetime than in the entire history of money."

"The quiet revolution in payments has enabled the creation of whole new industries such as e-shopping, it has changed our behaviour, and it has reduced transaction costs, and increased the speed and efficiency with which we can all pay each other. The next ten years will see even faster change."

Data sourced from Financial Times/Payments Council; additional content by Warc staff