PayPal plans to subsidize its new service, implying merchants may pay less than they currently do for transactions done through established debit and credit payment processors.
To sweeten the deal and get the world's top retailers on board, PayPal also plans to share more data on purchases and shopping activity. eBay Inc, which owns PayPal, has set a public goal of 20 major retailers testing the point-of-sale service by the end of 2012. Home Depot, the largest home improvement retailer, is running a test already and Office Depot is planning one.
There is a lot riding on this. PayPal is already a payment leader online, but e-commerce still accounts for less than 10 percent of U.S. retail sales. Going offline increases its addressable market by a factor of at least 10. If PayPal can grab a 2 percent share of checkout at physical stores, it would create a $70 billion business.
