PayPal Offers Free Card Processing, But For Who?

PayPal (NASDAQ:EBAY) is offering free credit, debit, check and PayPal processing for qualifying merchants until the end of 2013. The catch: The retailer has to trade in a cash register for a PayPal-compatible point-of-sale system, according to a blog post by PayPal president David Marcus on Tuesday (May 14).

The promotion will go live in June, although applications are being accepted now, Marcus wrote. He didn't give any other details of the deal, such as how much trade-in value a retailer will get in order to buy a PayPal-equipped POS from Erply, Leapset, Leaf, NCR Silver, ShopKeep or Vend, or exactly what "free" means when it comes to processing costs.

But The Wall Street Journal reported that to qualify for the promotion, merchants currently must be primarily using an old-fashioned system such as a cash register, and PayPal may send out employees to collect the register and verify the system upgrade. Marcus also told the Journal that there will also be limits on the size of the retailer that qualifies—the promotion is aimed at small merchants—and how much PayPal will pay for the upgrade.

That nebulous set of restrictions may hurt PayPal in this promotion, since it apparently excludes any retailer that has already advanced as far as 1990s-era POS technology.

Also on Tuesday, micro-POS vendor Square announced a new version of its card-swipe device, this one housed as a stylish stand for an iPad that can be used to replace a conventional POS terminal. The $299 Square Stand only works with older iPads (a version for the newest iPad with its Lightning connector will come later this year).

Square said many of its early adopters will be coffee, pastry or sandwich shops. But in a sign of how much work Square has ahead of it in its effort to go upscale, while the Square Stand announcement was made at a coffee shop, it wasn't a Starbucks (NASDAQ:SBUX), and the coffee chain—Square's largest retail partner—hasn't indicated it will use the new POS device.

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