Mobile payments companies expect to benefit from frustration of retailers

Mobile Payments Industry

Mobile Payments Industry

Traditional credit card companies are aggravating merchants who are turning toward alternatives.

Retailers may be looking to mobile payments as an alternative to traditional transactions, having clearly had enough with Visa and MasterCard, as merchants recently refused to accept a settlement in the lawsuit that is currently accusing these credit card giants of working together to set fees for their services.

PayPal is an important indicator of how retailer outrage is becoming a driver of alternatives.

Investors are currently keeping a close watch on PayPal’s owners, eBay, to see how quickly mobile payments start to cut their way into the share of the market that had previously belonged to credit cards.

Mobile payments deals are popping up all over the place.

PayPal has already been striking some notable deals over the last very short while. Its agreement for a pilot project with McDonald’s made international mobile commerce headlines, as did its more recent partnership with Discover, its rival. This latter arrangement will make it possible for any merchant that currently accepts Discover card to also allow consumers to use PayPal’s card-free transactions to make their purchases.

Instead of using a credit card, PayPal accounts can be used by consumers by entering a smartphone telephone number and a PIN. These mobile payments will be processed through Discover.

This is also giving the retailers who are frustrated with Visa and MasterCard with another reason to choose Discover, a company that has been watching its stock steadily climb over the last little while.

However, the true winner in this particular deal is PayPal, as it has been hunting for a way to give its account holders a way to use its services to make purchases in brick and mortar stores. From the merchant’s side of things, it takes only minutes for a merchant to set up a PayPal account in order to begin accepting these mobile payments, and there are no set up or monthly fees that need to be paid.

According to recent reports from PayPal, it has set its sights on stepping into at least 20 different major retailers for point of sale mobile payment pilot programs by the end of 2012. It has already made its way into 16 enormous chains, but this deal with Discover has suddenly skyrocketed its potential.

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