PayPal soft-launched a new service on Thursday, PayPal Here, which enables merchants to accept credit card payments on their card reader equipped mobile devices. The service, available with select merchants in the United States, Canada, Australia, and Hong Kong, competes directly with Square, a San Francisco-based startup launched almost two years ago.
Like Square, PayPal Here provides merchants with a free card reader and mobile app (iOS & Android) that allows merchants to receive credit card payments from mobile devices that are connected to the Internet.
PayPal Here also allows merchants to accept checks and issue invoices. The immediate benefit of PayPal Here over Square, besides the brand name, is the lower fee per swipe. PayPal charges a rate of 2.7%, while Square’s rate is slightly higher at 2.75%.
Merchants who signed up for PayPal Here will also receive a business debit card, which provides 1% cash back on eligible purchases, effectively pushing the swipe rate to 1.7%. It’s unsure what kind of purchases are considered “eligible,” though.
According to David Marcus, the PayPal’s Vice President of Mobile, the service will be available to all merchants in the four aforementioned countries next month. The service is set to be expanded to other countries later, but the company did not specify the exact roadmap and date.