PayPal and Discover said 7 million merchants accepting Discover credit cards will begin accepting payments for in-store purchases from PayPal's 50 million users starting in the second quarter of 2013.
PayPal called the announcement an extension of its strategy that is already deployed at nearly 2,000 Home Depot stores and 15 other retailers, PayPal said in a blog posted Wednesday. "We'll get consumers used to using PayPal everywhere they want to shop," said Don Kingsborough, vice president of retail for PayPal, in a conference call.
Home Depot's system allows a customer to pay for items with a PayPal account by simply typing a mobile phone number and PIN to transfer money stored with PayPal.
Kingsborough explained that PayPal will also provide its customers with physical cards that can be swiped to make a payment at merchants that accept Discover card payments. Both the mobile number and PIN and the PayPal card will access the user's PayPal account in the cloud, and the card will only serve as an access token, Kingsborough said. PayPal accounts can be linked to a customer's checking account, as well as to gift cards and traditional credit cards.
PayPal has been working with the 145 banks that supply the credit for Discover's customers to ensure full adoption of the in-store relationship between Discover and PayPal, Kingsborough said. He didn't offer details on how much PayPal will charge merchants for the transactions, although Home Depot has said the relationship with PayPal lowers the "abusive" bank fees it pays for traditional credit-card transactions.
While the Discover deal clearly helps PayPal expand beyond its traditional role for making online purchases, Discover said it will be giving its customers the flexibility of using PayPal as well. Discover will also benefit by potentially diverting customers away from using Visa and MasterCard to make payments.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is firstname.lastname@example.org.