PayPal and credit card provider Discover are teaming up to bring PayPal payments to Discover's network of 7 million U.S. merchant locations. Under the alliance, PayPal's 50 million customers will be able to make payments at retail stores beginning in April 2013.
The move gives additional momentum to PayPal's efforts to make the jump from online to in-store payments through its own digital wallet services. In May, the eBay unit struck partnerships with two the largest point-of-sale (POS) terminal companies—Verifone and Equinox—to expand its in-store payment system to 15 more retailers including Office Depot, Barnes & Noble and JCPenney.
PayPal had previously notched a similar deal with POS provider Ingenico as well as Home Depot. To be able to accept PayPal payments, merchants in the Discover network will have to upgrade their POS hardware and software.
Unlike other mobile wallet initiatives such as Google Wallet and Isis, PayPal’s offline payment system isn’t built on NFC (near field communications) technology, making it easier for retailers to integrate PayPal with existing POS systems. At checkout, users can either enter their phone number and PIN linked to their PayPal accounts or swipe a prepaid PayPal card to pay.
Still, PayPal has plenty of other competitors to consider in the space, especially Square, which recently announced a wide-reaching mobile payments deal with Starbucks. For its part, Discover appears to be hedging its bets in the mobile wallet wars, announcing its inclusion among credit cards supported within Google Wallet.