Paypal, a global e-commerce business which is subsidiary of eBay allows money transfers between businesses and individual online, requires no introduction. Paypal today announced that they have agreed to acquire card.io.
Card.io, a mobile commerce company founded by two AdMob employees released their Card.io payments app in January this year. It basically allows any person to accept a credit card payment by just scanning the credit card with phone’s camera, unlike competitors who require you to buy special hardware in order to process a credit card payment. There is no number typing or any special type of pesky registration where they would ask what you had for your breakfast. You have to just sign up with card.io by filling a simple form, hold a card up to your phone’s camera and that’s about it. Also, there is no setup or a monthly charge, which makes the deal even sweeter. Pricing has been 3.5% plus $0.30 per transaction, and can be withdrawn to your paypal or bank account. Card.io is still providing its SDK so that developers can integrate its technology into their own offering. Card.io has been used in many apps, including from popular startups like Uber and TaskRabbit.
Paypal’s move to acquire card.io will help them go against Square, a mobile payment start up which has been widely popular among merchants for making mobile payments possible. Square offers a hardware which connects to a mobile device and allows the user to swipe a card in order to complete a transaction. Square has replaced a standard credit card billing machine at businesses with an iPad connected with Square’s mobile swiper hardware. As a result of Apple’s partnership with Square, you can buy one of these sleek card-readers at an Apple Store. Despite catering only US businesses, the company has been very successful and has been processing $4 billion payments per year. Square levies a flat 2.75% transaction fee and is planning to go overseas soon, and this news is enough for paypal to feel threatened.
While feature set offered by Square may not be something ground shaking because it just saves time by not needing user to enter the 16 digit number, the San Francisco-based startup apparently attracted PayPal’s attention when the giant was working with it to integrate Card.io’s credit card capture technology into the PayPal app and was thrilled by employee’s passion. Here’s what Paypal executive Hill Ferguson had to say:
“While working with them, we were simply blown away by the creativity and drive of their employees,” he said. “They are a passionate and independent team that likes solving large, complex problems and we wanted them to join our team.”
As payments are moving away from credit cards, debit cards and cash to smartphone and tablets, Paypal is investing a lot in its digial wallet. After the acquisition, Card.io’s team will be working with Paypal’s digital wallet team. With the newly acquired technology, Paypal will be one step forward of Square and Google’s Google Wallet. Since mobile phones have become an inseparable part of our daily lives, they have also become a driving force for online companies and any sort of technology which extends its usability will be welcomed. According to the data from Ernst & Young, mobile payment market is expected to reach $245 billion by 2014, which is a lot for any payment processing company to ignore. It wouldn’t be a surprise if Paypal continues to acquire small companies with great technology in order to enhance its own offering.