Walmart, First Data Say No To PayPal

PayPal's plan to use Discover's (NYSE:DFS) payment-card network to get its in-store payment system into almost all U.S. stores that accept payment cards isn't quite working out. Contrary to what the eBay (NASDAQ:EBAY) subsidiary has been touting, all stores that accept Discover aren't automatically able to take PayPal payments—at least not until they and their acquirers explicitly sign on.

Result: Both Walmart (NYSE:WMT) and acquirer First Data have declined to accept the system, and Discover is now doing deals with acquirers one by one in order to get PayPal's system available in more stores. Discover said on Tuesday (April 30) that it has gotten a green light from 50 acquirers, and it is hoping PayPal will be live in 2 million stores by the end of this year, up from 250,000 now.

Among the large acquirers who have signed on are Vantiv (NYSE:VNTV), WorldPay, Global Payments (NYSE:GPN), Heartland (NYSE:HPY) and TSYS (NYSE:TSS). But none of them come close in scale to First Data, which is the acquirer for roughly 1 million stores. Discover said it is still negotiating with First Data, which told its customers last week that it "has decided not to implement support" for PayPal, according to Dow Jones.

And while some large retailers have cut deals directly with Discover and PayPal, Walmart—the biggest target for any new in-store payment scheme—has firmly declined. "Walmart does not accept PayPal in-store. The added complexity at the point of sale does not justify acceptance of PayPal," Walmart spokesman Randy Hargrove told Reuters.

That's not a big surprise. Walmart is pushing its own alternative payment system, MCX, and that makes it a direct competitor to PayPal in-store. But high-profile holdouts aren't going to make things easier as Discover and PayPal attempt to whittle away at the long list of Discover merchants that still don't accept PayPal.

Once that's done, the real work begins: breaking consumers of the decades-old habit of pulling out Visa or MasterCard at checkout time.

For more:

- See this Dow Jones story
- See this Reuters story
- See the Discover news release

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PayPal's In-Store Payments Go Live On Discover's Network April 19
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PayPal's In-Store Payments Scaring Wall Street