In an announcement that could be filed under the category common sense, credit card provider Discover said that it will be offering its merchants the ability to accept PayPal payments via in-store signage. Participating locations, which could total up to seven million in the U.S., do not need to upgrade their point-of-sales hardware and software. Ebay-owned PayPal says it has about 113 million users worldwide and more than 50 million in the U.S. alone.
Since there is apparently no cost involved for merchants to accept PayPal, it is a low-risk move for Discover to extend its financial infrastructure. The success of PayPal online and its ubiquity to make online payments as well as international transaction with often lower fees than the fees typically charged by financial institutions could make this an appealing solution in specific user scenarios. However, it is unlikely that it will challenge the dominance of traditional credit card payments.
For Discover, this is a major coup that has landed the company in the spotlight. And what could be wrong with that, even if the PayPal credit card extension does not succeed?