August 2012 will go down in history as the beginning of the end for the traditional payment card industry. Discover and PayPal just teamed up to offer what could prove to be the ultimate demise of the biggest payment system monopoly: in-store payments without involving the POS providers.PayPal’s Discover credit-card network deal will see PayPal integrated with Discover, which it will then push out to all merchants that accept Discover—assuming the acquirers don’t stop them. This is big news. Feeling violated by the costs of PCI compliance, merchants are loathe to spend any money on their POS technology, especially when it comes to payment systems. And although there has been a lot of news about the payment industry in the last month, noticeably absent in the media are the major POS players. On the surface, this announcement appears to remove that obstacle.PayPal’s main value proposition is cheaper access to a customer’s money in many cases, having the ability to use ACH transactions instead of the more expensive card processing. If PayPal does offer to reduce the cost of processing to the merchants, it gives itself a great chance of being not only adopted but marketed by merchants as a preferred payment
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