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Square is Square, PayPal is Here!

Week 12, 2012

With PayPal Here announcement, the payment dongle market is getting even more overcrowded. Square has been efficient at making its brand name and its iconic reader easily recognizable. Other solutions exist: Roam Data, Intuit, iZettle, …

Square has been by far the most vocal of the lot, and got its iconic reader easily recognized in the US.

The PayPal Here card reader and more globally its wallet approach get into direct competition with Square. The first difference is that PayPal says its reader is “fully encrypted”, whereas we all know how unsecure Square approach is. We will have to wait for security experts to investigate the PayPal Here security scheme in detail, and establish to which extent it is secure or not given it relies on magstripe. Another difference is that the solution is brought by Paypal, which has demonstrated its reliability over years in performing internet based payment. The change announced with PayPal Here is a daunting task, let’s wait and see about execution. On the other hand, Square just started, and its single asset is the personality of Jack Dorsey, the founder of Twitter. Another difference is the commission schedule proposed by PayPal: they are announcing a 2.7% charge, when Square is charging 2.75%, no big deal here.

At the same time, in a quieter manner, other nations in the world are demonstrating their confidence in secure transactions technologies rather than sticking with outdated magstripe technology. China is adopting EMV, and multiplying its NFC experiments, and Japan and Korea are ready to launch cross border NFC payments.

Thierry Spanjaard

Chief Editor

Smart Insights