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Dongle Madness: PayPal Takes on Square

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Before Square, the mobile Point of Sale (POS) payment company that Jack Dorsey of Twitter founded in 2010, the word dongle was a lesser-known term for a piece of hardware that plugged into a computer.

Yesterday, however, with PayPal announcing their new mobile payment service, and entry into Square’s hundred-billion-dollar mobile payment industry, the word dongle will be much more common vocabulary.

PayPal’s new dongles will directly compete with the mobile payment industry that Square pioneered, which is expected to top $200 billion by 2015, according to research by the independent research firm Aite Group.

The largest market for these mobile payment services is with small business owners, many of which do not currently accept credit cards. Companies like Square and PayPal offer an affordable option for small businesses to accept credit cards.

PayPal’s service, however, will charge a fee of 2.7 percent, to Square’s 2.75 percent.

Other competitors to Square and PayPal include Intuit’s GoPayment, a company that offers a similar mobile payment model: their free dongle supports pay per transaction, with a fee of 2.7 percent.

A Chicago-based company, Cashier Live, has taken a different approach in an attempt to appeal to small business owners. For around $500, vendors can purchase a Cashier Live scanner and card reader dongle that attaches around a phone instead of to the top, like Square, PayPal and Intuit.

While slightly more cumbersome, vendors have the added feature of a scanner with Cashier Live, unlike other mobile payment services. 

Square, however, is continuing to innovate. Earlier this month Square announced it will be rolling out a new payment system with 30 NYC taxi cabs. The current LCD touchscreen and card reader in those cabs will be replaced with an iPad and Square card reader.Square's iPad NYC taxi payment system 

Although Square is well established as the pioneering disruptive company of the mobile payment industry, newcomers like PayPal have moved into the industry for a piece of the large market. 

As for small business owners, each payment system will offer certain advantages. The ability to accept credit cards in general, is attractive to any small business.

As the industry continues to grow, we’ll all become more accustomed to our new vocabulary: dongle.

About Thomas Samph

  • Philip Cohen

    Square (in which Visa bought an interest in 2011) has absolutely nothing to worry about, sans its effectively mandated use on the eBay marketplace, the clunky PreyPal could not hit the side of an old timber barn, let alone a modern B&M one.

    “Anuj [Nayer], who is PayPal’s Global Director of Communications, said payments processed through PayPal Here would be protected the same as any other PayPal payment method – which explains why the Terms of Sale for Here includes a mention of rolling reserves. Yes, merchants who use the new card reader will be subject to the regular PayPal reserves and holds (rare occurrences for sellers in most categories, said Anuj), and PayPal is extending buyer protection to shoppers who transact with PayPal Here merchants.”

    Well, many merchants already know what PayPal “protection” is like; many merchants already know what PayPal “rolling reserves” and “holds” are about; and many merchants already know what PayPal “buyer protection” is about–it has a hard wired bias towards the buyer: effectively there is no transaction mediation process as any reasonable person would understand it. And PayPal’s Nayer gives a different meaning to the word “rare” to what the rest of us understand it to mean … And for all this, PreyPal’s fee is only 0.05% cheaper than Square’s? Are they serious?

    Am I missing something here or is this initial launch information not enough to cause this product to be literally “dead on arrival”? Donahoe can’t mandate the use of this clunky prodict. To me it sounds like another desperate Donahoe foray with Alice down the rabbit hole.

    Next time you drop into Home Depot, ask the check-out chick if anyone has yet used (the wholly eBay-funded roll out of) PreyPal to make a point-of-sale purchase. PreyPal at B&M Point-of-Sale is little more than an eBay Dept of Spin-created illusion and is undoubtedly a total waste of eBay shareholders’ funds. PayPal Here will likewise be another eBay lead balloon …

    And, just for a laugh, some comments on PayPal “The New Way To Pay In-Store”, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Here, PayPal Local and Watch With EBay

    eBay / PayPal / Donahoe: Dead Men Walking