Discover Deal Puts PayPal in 7M Retail Locations by 2013

A new partnership between PayPal and Discover Financial Services, the nation's fourth-largest credit card issuer, pushes the eBay division even further into the brick-and-mortar retail payment space – to more than seven million merchant locations in the U.S., to be precise. Beginning in 2013, "PayPal can be enabled as a payments option for our 50-plus million active users in the U.S. at any in-store location that accepts Discover," said PayPal vice president of retail and prepaid products Don Kingsborough in a statement.

"The establishment of this relationship is a major industry milestone, which will help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale," said Diane Offereins, president of Discover Payment Services.

Retailers will not need to add new POS hardware or software to accept PayPal-issued cards, according to the companies; consumers will swipe the cards through existing readers and enter a four-digit PIN. The new cards will have a Discover Issuer Identification Number, or IIN, to identify the cardholder; Discover has already set up the IINs for the PayPal cards on its network, according to Reuters. PayPal will charge retailers a small fee when customers pay using the cards, and in turn will pay Discover for access to its network on a per-transaction basis.

PayPal has been aggressively moving into store payments. After enabling mobile phone-based payments via a rapid rollout to all Home Depot stores earlier this year, PayPal expanded its retailer roster in May with 15 more name-brand companies, including JCPenney, Barnes & Noble, Toys 'R' Us, Advance Auto Parts, Abercrombie & Fitch, Foot Locker, Office Depot, American Eagle Outfitters, Guitar Center and Jos. A. Bank Clothiers.

The company also launched a mobile payments solution for small businesses, PayPal Here, and has forged relationships with several leading POS terminal vendors.

The Discover deal, announced August 22, "will deliver a truly seamless digital wallet, available most places consumers shop offline, which offers the speed, simplicity and security already enjoyed by 113 million active PayPal customers online," said Kingsborough.

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