Payments service provider PayPal, a unit of eBay Inc. (EBAY: Quote), said Wednesday that under a mobile payments joint venture with credit card company Discover Financial Services (DFS: Quote), it will gain access to over 7 million merchant locations in the U.S. and potentially to millions of international merchant locations in the future.
Starting in 2013, PayPal said that participating merchants will be enabled to accept PayPal easily through their existing relationship with Discover. Merchants will not need to install or upgrade existing point-of-sale hardware or software to offer PayPal, while consumers would know of this additional payments option through in-store signage.
San Jose, California-based PayPal expects to bring brick-and-mortar merchants more shoppers in store and to extend convenience and utility for consumers through innovative mobile payment solutions. Further, the company said it expects its more than 50 million U.S. customers to help increase customer engagement, loyalty and incremental sales at the physical point of sale.
Diane Offereins, president of Discover Payment Services said, "The establishment of this relationship is a major industry milestone, which will help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale."
Illinois-based Discover operates the Discover card, offers personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of Discover Network, PULSE, a ATM/debit network; and Diners Club International, a global payments network.
Don Kingsborough, PayPal's vice president of Retail said, "This relationship will deliver a truly seamless digital wallet, available most places consumers shop offline, which offers the speed, simplicity and security already enjoyed by 113 million active PayPal customers online."
PayPal ended the recent second quarter with 113.2 million active registered accounts, up 13 percent over the year-ago period. Revenue for the quarter grew 26 percent from the year-ago period, driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption and strong growth in Bill Me Later.
PayPal's net total payment volume grew 20 percent from the year-ago period to $34.5 billion.
During the second quarter, PayPal announced a joint venture with SoftBank in Japan, extending its global expansion strategy for small business payment solution PayPal Here.
Currently, sixteen large brand-name U.S. retailers, including Abercrombie & Fitch Co. (ANF: Quote), Barnes & Noble Inc. (BKS: Quote), Home Depot Inc. (HD: Quote) and Office Depot Inc. (ODP: Quote), have announced their intent to work with PayPal on point of sale initiatives.
The PayPal point of sale payment solution, which gives shoppers the opportunity to pay using just their mobile phone number or PayPal payment card and PIN, was rolled out in Abercrombie & Fitch and Jos A. Bank Clothiers Inc. (JOSB: Quote) stores in the U.S., beginning in the second quarter.
In Wednesday's regular session, DFS is trading at $38.58, up $1.58 or 4.27 percent on 2.76 million shares.
EBAY is trading at $47.72, up $1.87 or 4.08 percent on 4.90 million shares.
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by RTT Staff Writer
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