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PayPal Trumps Square’s Deal With Starbucks by Partnering With Discover

35 points by zachh 14y ago

sp332 14y ago
But PayPal still refuses to be regulated like a bank, right? And how long will it be before "PayPal is holding my funds" stories go mainstream?
- dedward 14y ago
  It's not like banks get a choice - more like lawmakers have yet to force paypal into regulation.
  - sp332 14y ago
    They are regulated, but not as a bank (in the US). It's complicated. http://news.cnet.com/2100-1017-858264.html http://news.cnet.com/2100-1017-858264.html
  - betterth 14y ago
    "It's not like banks get a choice" Right you might want to go watch Jamie Dimon's testimony to the Senate Banking Committee two months ago. It's fair to say that the senators in control of that Committee absolutely ingratiated themselves to the JP Morgan Chase CEO, falling over each other with offers of "improving regulation" and questions of "how can we make things better for your company". I think it's absolutely fair to say that in this business-is-a-god-capable-of-no-wrong idea some subscribe to in Washington absolutely leads to banks effectively having an enormous amount of choice and control in the regulation process.
- dangrossman 14y ago
  This is a silly complaint. You can't choose how to be regulated. I can't volunteer to have my software business regulated as a sewage treatment plant, or as a stock brokerage. PayPal isn't a bank so laws that regulate banks don't apply to them any more than they apply to Amazon Payments, Google Checkout or Stripe. However, the laws on money transfer organizations apply to them in all 50 states.
  - rictic 14y ago
    I believe the charge is that they've done or avoided doing some very specific and otherwise natural things to avoid falling under banking regulation.
podperson 14y ago
I think Starbucks are more common than places that take Discover.
- ConstantineXVI 14y ago
  AFAIK, McDonald's and Walmart take Discover; McDonald's alone has more locations than Starbucks. That said, I can't remember the last time I've seen anyone use Discover anywhere. Starbucks has far better visibility; they still likely have the marketing advantage.
  - ams6110 14y ago
    I use Discover and AMEX almost exclusively for cashback/rewards points.
    - redog 14y ago
      I've used Discover for years and can't really think of a place that didn't take it. I just recently canceled it and have switched to AMEX which I have already found a half a dozen places that don't take it.
      - podperson 14y ago
        IIRC Costco takes Amex (and not Discover) and Sam's Club takes Discover (and not Amex). It's been a while since I have darkened the door of a Sam's Club, but at the time I thought that was a pretty big win for Costco...
X-Istence 14y ago
Sorry, but I as one of those 50 million Paypal users will continue to refuse to do business using Paypal unless absolutely necessary for ease of use (sadly there still is no easier way to have people pay me for services besides PayPal from various other countries in the world). I don't trust them with my money, and I certainly don't trust them to handle it correctly.
- freehunter 14y ago
  Yeah, I only use PayPal for overseas transactions as well. I don't trust PayPal, but I trust overseas businesses less and sometimes its the only way to make a transaction.
  - rm999 14y ago
    I'm the same way. What sucks is overseas is riskier, and I got frauded three times in two years. So Paypal permanently banned me from their service.
ankeshk 14y ago
This news is exciting because it marks the beginning of offline wallet-less transactions. You can go to a store with nothing and end up buying something with your phone number and a pin code. PayPal retains its crown for convenient payments. Making offline payments with your phone number and a pin code indeed seems like the future. Its unfortunate however that PayPal is not vendor friendly.
- paulsutter 14y ago
  How is that easier than using a credit card?
s_henry_paulson 14y ago
As with many new technology advances in the finance sector, I predict this to be use for crime. Right now it's easy for criminals to get money into paypal accounts, but difficult to get money in their hands, because it often requires steps that involve tying a transaction to a bank account or something traceable. If someone can just walk into a store and type a couple of numbers into a keypad and walk out with items worth cash, it gives the criminals an easy gateway to spend their ill-gotten funds.
- jrajav 14y ago
  I'm assuming that the number tied to your account would be verified, in which case that becomes the new traceable tie between you and the account. If it's not verified, I certainly agree.
  - s_henry_paulson 14y ago
    Phone numbers are not traceable. Google voice, etc.
ConstantineXVI 14y ago
This makes it sound like PayPal's proxying through Discover; building within their platform. I don't see any potential way this could backfire when Discover decides it wants to do it's own mobile payments. None at all.
paulsutter 14y ago
Starbucks using pay-by-name will be a breakthrough, assuming that's where the Square partnership is going. Since Starbucks is already asking for your name when you order coffee, it could turn into a great customer experience that would build broad momentum for pay-by-name. Is this PayPal agreement just adding a new and more complicated option to the existing terminal base? Will retail clerks even know what it is, and will there be any reason for a consumer to migrate from credit card use?
- hwestbrook 14y ago
  this is my first reaction too. I don't see how this makes it easier for the consumer. I don't especially want to type my user name and password into one of those terminals.
  - paulsutter 14y ago
    Pay by name uses the GPS in your phone so that when you walk into Starbucks, your face and name appear on the cash register. Walk into a Starbucks in a distant city: Customer: "cappucino please" employee: "Paul, right?" customer: "yes" employee: "decaf and skim, as usual?" customer: "yes, thanks" employee: "ok, you've paid by square" The partnership didn't mention pay by name, but I can't imagine the partnership is really meaningful without it. This could spur widespread adoption of pay by name. When people start doing this at Starbucks, it will quickly seem like a normal way to pay, and using a card may start to seem clunky. I guarantee that typing in a PayPal account number is hella clunky, and NFC little better. Do I reall want to unlock my phone to buy coffee?
- CountHackulus 14y ago
  Pay by name would be terrible for me, I have a very French name, and no Starbucks barista around here speaks enough French which means I have to spend quite a while spelling out my name for them. I've taken to just telling them my name is "G". Now pay by NFC...
  - erikpukinskis 14y ago
joshontheweb 14y ago
PayPal recently turned off my account because I was unable to verify my address with a call to a landline ( don't have one ). I have little faith for their future. This discover partnership is something that should have been done years ago. It's too late now IMO.
e1ven 14y ago
Part of where I get confused here, is that Paypal already has a debit card... Given the prevalence of places that accept debit cards to buy things, how is this a revolution? https://personal.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=marketing_us/debit_card https://personal.paypal.com/us/cgi-bin/?cmd=_render-content&...
- drumdance 14y ago
  They offer a debit card, but I don't know what the uptake is. I've had a Paypal account since they first launched and have never had any interest in getting a debit card.
- amolsarva 14y ago
  That debit card is an actual CARD, that you go get, and it has a Mastercard logo on it (not that it matters which so much, but that is one of the payment networks like Visa, Discover, Amex) The big thing is you can use your Paypal ACCOUNT! Not get a whole new card. Seems pretty massive increase in their reach
  - e1ven 14y ago
    "Starting in April, Kingsborough said, Discover’s merchants will be able to begin accepting PayPal’s charge cards." It goes on to talk about other payment methods, but those seem optional. Most places that accept discover won't change POS systems to allow that.. So, again, it seems to be a pass-thru plastic card, just like they have now. I KNOW I'm missing something. I just don't know what.
dr_ 14y ago
this is wrong. Only because it's not that different from most payment mechanisms already in place. Squares goal, it seems, is to allow vendors to build a better relationship with their customers, which can hopefully increase sales. In the longer term, it's a software play and I think Starbucks realizes this. PayPal is just another method of paying for your stuff and leaving the store, maybe never to return.
nrj 14y ago
Fry: Do you take Visa? Clerk: Visa hasn't existed for 500 years. Fry: American Express? Clerk: 600 years. Fry: Discover Card? Clerk: Sorry, we don't take Discover.
- Zimahl 14y ago
  Customer: Do you accept the Discover Card? Peter Griffin: Ha! Hey, Lois! Diamond Jim Brady over here just asked if we accept the Discover Card. Lois Griffin: Ohhhh! They're in an exclusive club that's called 'anybody'! Peter Griffin: Yeah! No, no, no! I don't think so. You know, you know, I'd rather take two live chickens than your fly-by-night credit card. I would rather take a jar of pennies which value was less than your bill.
  - joshu 14y ago
    When I worked at Morgan Stanley, which owned Discover card, our corporate cards were, of course, Discover cards. They also assigned us Amex cards in case we were somewhere that didn't take Discover cards. And also Visa cards, in case we were somewhere that didn't take Amex cards.
jasonlingx 14y ago
PayPal stopped innovating a long time ago. This isn't going to save them.
derwiki 14y ago
Fry: Do you take Visa? Clerk: Visa hasn't existed for 500 years. Fry: American Express? Clerk: 600 years. Fry: Discover Card? Clerk: Sorry, we don't take Discover.
- reitzensteinm 14y ago
  Come on, if you're going to post a joke here, at least do a quick check to see nobody else has posted the exact same text.
  - derwiki 14y ago
    Crap, that was my bad. I don't see a way to delete my dupe post though -- is that impossible?
smallegan 14y ago
Square is a way for businesses to accept credit cards. Paypal is a "bank" that offers a type of credit card. I fail to see how they are really competitors. Square takes Discover so the way I see this is Square just got the ability to accept Paypal?
- camiller 14y ago
  Square is also a way to make payments https://squareup.com/pay-with-square https://squareup.com/pay-with-square Which I think makes it more of a competitor to Google wallet. However I think it only works with merchants that use square to accept payments so...
meanJim 14y ago
'Trumps' is the wrong word to use here
bjustin 14y ago
If the stereotypes about Starbucks customers being hipster technologists* are true, then Square is still ahead of PayPal here. The crucial difference between the Square deal and the PayPal deal is that the people who go to Starbucks are more likely to adopt a new technology than your average Walmart shopper. * I imagine this is not accurate, but it is the sense I've gotten from online jokes about Starbucks. Either way an average Starbucks customer is likely better off than an average Walmart shopper, just based on how necessary Starbucks vs. Walmart is in terms of goods sold.

35 points by zachh 14y ago

sp332 14y ago

But PayPal still refuses to be regulated like a bank, right? And how long will it be before "PayPal is holding my funds" stories go mainstream?

dedward 14y ago
It's not like banks get a choice - more like lawmakers have yet to force paypal into regulation.
- sp332 14y ago
  They are regulated, but not as a bank (in the US). It's complicated. http://news.cnet.com/2100-1017-858264.html http://news.cnet.com/2100-1017-858264.html
- betterth 14y ago
  "It's not like banks get a choice" Right you might want to go watch Jamie Dimon's testimony to the Senate Banking Committee two months ago. It's fair to say that the senators in control of that Committee absolutely ingratiated themselves to the JP Morgan Chase CEO, falling over each other with offers of "improving regulation" and questions of "how can we make things better for your company". I think it's absolutely fair to say that in this business-is-a-god-capable-of-no-wrong idea some subscribe to in Washington absolutely leads to banks effectively having an enormous amount of choice and control in the regulation process.
dangrossman 14y ago
This is a silly complaint. You can't choose how to be regulated. I can't volunteer to have my software business regulated as a sewage treatment plant, or as a stock brokerage. PayPal isn't a bank so laws that regulate banks don't apply to them any more than they apply to Amazon Payments, Google Checkout or Stripe. However, the laws on money transfer organizations apply to them in all 50 states.
- rictic 14y ago
  I believe the charge is that they've done or avoided doing some very specific and otherwise natural things to avoid falling under banking regulation.

podperson 14y ago

I think Starbucks are more common than places that take Discover.

ConstantineXVI 14y ago
AFAIK, McDonald's and Walmart take Discover; McDonald's alone has more locations than Starbucks. That said, I can't remember the last time I've seen anyone use Discover anywhere. Starbucks has far better visibility; they still likely have the marketing advantage.
- ams6110 14y ago
  I use Discover and AMEX almost exclusively for cashback/rewards points.
  - redog 14y ago
    I've used Discover for years and can't really think of a place that didn't take it. I just recently canceled it and have switched to AMEX which I have already found a half a dozen places that don't take it.
    - podperson 14y ago
      IIRC Costco takes Amex (and not Discover) and Sam's Club takes Discover (and not Amex). It's been a while since I have darkened the door of a Sam's Club, but at the time I thought that was a pretty big win for Costco...

X-Istence 14y ago

Sorry, but I as one of those 50 million Paypal users will continue to refuse to do business using Paypal unless absolutely necessary for ease of use (sadly there still is no easier way to have people pay me for services besides PayPal from various other countries in the world). I don't trust them with my money, and I certainly don't trust them to handle it correctly.

freehunter 14y ago
Yeah, I only use PayPal for overseas transactions as well. I don't trust PayPal, but I trust overseas businesses less and sometimes its the only way to make a transaction.
- rm999 14y ago
  I'm the same way. What sucks is overseas is riskier, and I got frauded three times in two years. So Paypal permanently banned me from their service.

ankeshk 14y ago

This news is exciting because it marks the beginning of offline wallet-less transactions. You can go to a store with nothing and end up buying something with your phone number and a pin code. PayPal retains its crown for convenient payments. Making offline payments with your phone number and a pin code indeed seems like the future. Its unfortunate however that PayPal is not vendor friendly.

paulsutter 14y ago
How is that easier than using a credit card?

s_henry_paulson 14y ago

As with many new technology advances in the finance sector, I predict this to be use for crime. Right now it's easy for criminals to get money into paypal accounts, but difficult to get money in their hands, because it often requires steps that involve tying a transaction to a bank account or something traceable. If someone can just walk into a store and type a couple of numbers into a keypad and walk out with items worth cash, it gives the criminals an easy gateway to spend their ill-gotten funds.

jrajav 14y ago
I'm assuming that the number tied to your account would be verified, in which case that becomes the new traceable tie between you and the account. If it's not verified, I certainly agree.
- s_henry_paulson 14y ago
  Phone numbers are not traceable. Google voice, etc.

ConstantineXVI 14y ago

This makes it sound like PayPal's proxying through Discover; building within their platform. I don't see any potential way this could backfire when Discover decides it wants to do it's own mobile payments. None at all.

paulsutter 14y ago

Starbucks using pay-by-name will be a breakthrough, assuming that's where the Square partnership is going. Since Starbucks is already asking for your name when you order coffee, it could turn into a great customer experience that would build broad momentum for pay-by-name. Is this PayPal agreement just adding a new and more complicated option to the existing terminal base? Will retail clerks even know what it is, and will there be any reason for a consumer to migrate from credit card use?

hwestbrook 14y ago
this is my first reaction too. I don't see how this makes it easier for the consumer. I don't especially want to type my user name and password into one of those terminals.
- paulsutter 14y ago
  Pay by name uses the GPS in your phone so that when you walk into Starbucks, your face and name appear on the cash register. Walk into a Starbucks in a distant city: Customer: "cappucino please" employee: "Paul, right?" customer: "yes" employee: "decaf and skim, as usual?" customer: "yes, thanks" employee: "ok, you've paid by square" The partnership didn't mention pay by name, but I can't imagine the partnership is really meaningful without it. This could spur widespread adoption of pay by name. When people start doing this at Starbucks, it will quickly seem like a normal way to pay, and using a card may start to seem clunky. I guarantee that typing in a PayPal account number is hella clunky, and NFC little better. Do I reall want to unlock my phone to buy coffee?
CountHackulus 14y ago
Pay by name would be terrible for me, I have a very French name, and no Starbucks barista around here speaks enough French which means I have to spend quite a while spelling out my name for them. I've taken to just telling them my name is "G". Now pay by NFC...
- erikpukinskis 14y ago

joshontheweb 14y ago

PayPal recently turned off my account because I was unable to verify my address with a call to a landline ( don't have one ). I have little faith for their future. This discover partnership is something that should have been done years ago. It's too late now IMO.

e1ven 14y ago

Part of where I get confused here, is that Paypal already has a debit card... Given the prevalence of places that accept debit cards to buy things, how is this a revolution? https://personal.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=marketing_us/debit_card https://personal.paypal.com/us/cgi-bin/?cmd=_render-content&...

drumdance 14y ago
They offer a debit card, but I don't know what the uptake is. I've had a Paypal account since they first launched and have never had any interest in getting a debit card.
amolsarva 14y ago
That debit card is an actual CARD, that you go get, and it has a Mastercard logo on it (not that it matters which so much, but that is one of the payment networks like Visa, Discover, Amex) The big thing is you can use your Paypal ACCOUNT! Not get a whole new card. Seems pretty massive increase in their reach
- e1ven 14y ago
  "Starting in April, Kingsborough said, Discover’s merchants will be able to begin accepting PayPal’s charge cards." It goes on to talk about other payment methods, but those seem optional. Most places that accept discover won't change POS systems to allow that.. So, again, it seems to be a pass-thru plastic card, just like they have now. I KNOW I'm missing something. I just don't know what.

dr_ 14y ago

this is wrong. Only because it's not that different from most payment mechanisms already in place. Squares goal, it seems, is to allow vendors to build a better relationship with their customers, which can hopefully increase sales. In the longer term, it's a software play and I think Starbucks realizes this. PayPal is just another method of paying for your stuff and leaving the store, maybe never to return.

nrj 14y ago

Fry: Do you take Visa? Clerk: Visa hasn't existed for 500 years. Fry: American Express? Clerk: 600 years. Fry: Discover Card? Clerk: Sorry, we don't take Discover.

Zimahl 14y ago
Customer: Do you accept the Discover Card? Peter Griffin: Ha! Hey, Lois! Diamond Jim Brady over here just asked if we accept the Discover Card. Lois Griffin: Ohhhh! They're in an exclusive club that's called 'anybody'! Peter Griffin: Yeah! No, no, no! I don't think so. You know, you know, I'd rather take two live chickens than your fly-by-night credit card. I would rather take a jar of pennies which value was less than your bill.
- joshu 14y ago
  When I worked at Morgan Stanley, which owned Discover card, our corporate cards were, of course, Discover cards. They also assigned us Amex cards in case we were somewhere that didn't take Discover cards. And also Visa cards, in case we were somewhere that didn't take Amex cards.

jasonlingx 14y ago

PayPal stopped innovating a long time ago. This isn't going to save them.

derwiki 14y ago

Fry: Do you take Visa? Clerk: Visa hasn't existed for 500 years. Fry: American Express? Clerk: 600 years. Fry: Discover Card? Clerk: Sorry, we don't take Discover.

reitzensteinm 14y ago
Come on, if you're going to post a joke here, at least do a quick check to see nobody else has posted the exact same text.
- derwiki 14y ago
  Crap, that was my bad. I don't see a way to delete my dupe post though -- is that impossible?

smallegan 14y ago

Square is a way for businesses to accept credit cards. Paypal is a "bank" that offers a type of credit card. I fail to see how they are really competitors. Square takes Discover so the way I see this is Square just got the ability to accept Paypal?

camiller 14y ago
Square is also a way to make payments https://squareup.com/pay-with-square https://squareup.com/pay-with-square Which I think makes it more of a competitor to Google wallet. However I think it only works with merchants that use square to accept payments so...

meanJim 14y ago

'Trumps' is the wrong word to use here

bjustin 14y ago

If the stereotypes about Starbucks customers being hipster technologists* are true, then Square is still ahead of PayPal here. The crucial difference between the Square deal and the PayPal deal is that the people who go to Starbucks are more likely to adopt a new technology than your average Walmart shopper. * I imagine this is not accurate, but it is the sense I've gotten from online jokes about Starbucks. Either way an average Starbucks customer is likely better off than an average Walmart shopper, just based on how necessary Starbucks vs. Walmart is in terms of goods sold.