Aaron Thorne used to cringe each time he had to turn away a customer who didn’t have cash while working farmers’ markets in the San Francisco bay area.
“When I only took cash, people would either have to go to the ATM or they would say they would come back next week,” says Thorne, who is founder and executive chef of Hiroshi’s catering. That situation was the opposite of the convenient experience he wanted to give his customers and it also cost him sales, he says.
To accept cards and other non-cash payments at farmers’ markets, Thorne is using a PayPal Here, a service that lets merchants take payments via their mobile phones. PayPal Here, which eBay Inc. launched earlier this year, offers merchants a free encrypted card reader that plugs into a smartphone and a mobile app that works with iPhones and mobile devices using Google Inc.’s Android operating system. The combo of the two enables stores, vendors who sell their wares at trade shows or other small merchants, to accept credit and debit cards, as well as PayPal and checks with their smartphones. More than 200,000 merchants have signed up to try out PayPal Here, eBay says, and it expects the service to be widely available in the second quarter.
Thorne says about 20-25% of his customers at farmers’ markets pay via credit card or PayPal, and he uses PayPal Here to take those payments.
Thorne advertises that he takes PayPal and credit cards on his farmers’ market menu. He says in particular, shoppers who read on the menu that Hiroshi’s takes PayPal are intrigued as to how it works. Many people still only think of PayPal as a way to pay online, he says.
To pay with PayPal using PayPal Here, consumers download the PayPal mobile app. When a shopper opens the app, a list of nearby merchants who accept PayPal Here pops up. The consumer finds the desired merchant within the app and checks in. When the consumer checks in, his PayPal information pops up on the merchant’s app along with the consumer’s photo so that the merchant can verify his identity when he arrives. When the consumer arrives at the merchant and selects his goods, the merchant charges his PayPal account without the consumer ever having to touch his smartphone or wallet.
Thorne notes one consumer who saw the PayPal logo at Hiroshi’s, downloaded the app and paid using PayPal all while waiting in line.
“It was pretty neat,” Thorne says. “He had a PayPal account but was like, ‘How do I use it?’ He downloaded the app right there and it was super easy to use.”
The PayPal Here service is not the only one of its kind on the market. Competitors such as Square and PayAnywhere offer similar services.
Thorne says he switched from Square to PayPal Here because he finds consumers are more comfortable with the PayPal name and also because at the time Square did not encrypt payment card data. Square has since added encryption.
Square charges merchants a 2.75% per card-present transaction and 3.5% plus 15 cents per transaction fee for each payment when a card is not swiped. PayAnywhere charges 2.69% per swipe and charges $9.95 for its app and card reader.
PayPal Here charges a fee of 2.7% of the purchase amount for swiped transactions and PayPal payments and 3.5% plus a 15-cent fee for any transaction in which a merchant keys in card data. The service also enables merchants to accept checks by using the phone’s camera to get an image of the check and electronically accept it as payment. Merchants also can track cash transactions via the PayPal Here app.