PayPal has announced a service that acts as a digital wallet system for consumers. PayPal president and CEO John Donahoe announced the dongle that can be used for accepting credit cards. This service competes directly against Square. The service is called “PayPal Here.” The credit card reader appears to be a blue triangle that snaps on top of the iPhone through a headphone jack. The device has a wing on a hinge to remain stable on top of the phone.
The device uses an app called “PayPal Here” for the merchant to punch in an amount. The merchant would then hand the phone to the customer for them to tip and sign. The customer could have the receipt e-mailed to them.
The app has a “Scan Card” where the iPhone uses the camera to read the credit card number if the dongle is not available. The merchant would still need the CVV and zip code for this feature to use. The app accepts any credit card or debit card. It can also be used for tracking cash payments.
The card reader and app is encrypted. PayPal is offering both for free, but they will charge a flat rate of 2.7%. PayPal says that the free debit card it offers will give 1% cash back, which makes the effective rate 1.7% if you use that card. PayPal Here will be available in the U.S., Canada, Australia, and Hong Kong started today.