It’s official. Paypal has launched the first serious attempt to challenge the credit card dominance by Visa/MC since American Express tried to create a market alternative in the corporate and high-end segment.
It’s an expensive proposition by Paypal, and it’s going to take time to convert SMEs. It’s also uncertain and full of business risks. But it’s worth it to lay a presence in the marketplace, be noticed, gain credibility and build momentum.
After working for years on the consumer side, now Paypal is focusing on the acquiring side, realizing that their wallet will not gain real traction in the brick and mortar POS space unless they provide the infrastructure to bypass the credit card dominance in POS terminals.
It would have been more efficient to upgrade the existing POS terminals to be interoperable with the new digital wallets. But the migration to NFC will take much longer than expected, and the restrictions to open them to other competitors seemed to justify launching a whole new bypass, armed with e-commerce capabilities and most importantly, the incentive to the merchant to get a new cash register. In fact the most valuable asset to Paypal is to gain a foothold in the retail POS payment space. But it will come with an expensive price tag for Paypal. Time will tell if it was worth it.