PayPal Exec Woos Big Retailers with Pricing, Data

Don Kingsborough wants PayPal displayed alongside Visa, MasterCard and American Express in retail stores. To get there, he will compete aggressively on price.

As the executive leading PayPal’s push into physical stores, he hopes to tap long-simmering tensions over billions of dollars in fees the payment giants charge merchants each year.

Kingsborough said PayPal plans to subsidize its new service, implying merchants may pay less than they currently do for transactions done through established debit and credit payment processors.

To sweeten the deal and get the world’s top retailers on board, PayPal also plans to share more data on purchases and shopping activity.

EBay Inc, which owns PayPal, has set a public goal of 20 major retailers testing the point-of-sale, or POS, service by the end of 2012. Home Depot, the largest home improvement retailer, is running a test already and Office Depot is planning one.

Kingsborough, head of retail and prepaid products at PayPal, was even more confident in a recent interview with Reuters.

“We are going to do it with the greatest brands in the world — Home Depot and every other top-100 retailer,” Kingsborough said. “There isn’t a major brand who we haven’t talked to,” he added, while declining to identify other retailers.

There is a lot riding on this. PayPal is already a payment leader online, but e-commerce still accounts for less than 10 percent of U.S. retail sales. Going offline increases its addressable market by a factor of at least 10, according to Dana Stalder, a former eBay and PayPal executive who is now general partner at venture capital firm Matrix Partners.

“If PayPal can break into this it will be an enormous company,” Stalder said. He does not own eBay shares.

If PayPal can grab a 2 percent share of checkout at physical stores that would create a $70 billion business, according to eBay Chief Executive John Donahoe.

“2012 is trial and learn. 2013 and beyond is when we really scale it in the U.S. and globally and across categories,” Donahoe told Reuters in a recent interview. “That’s the goal I’m holding Don to in 2012 — do we have a scalable product?”

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