PayPal, a product and online payment processing company owned by eBay, announced a recent acquisition which will give it the opportunity to tap into mobile card payments. PayPal acquired a rival company, Card.io, which allows users to process credit cards by snapping a picture with their mobile device.
Online banking and payment processing has become especially popular with online banks like ING Direct (a product of Capital One) and Chase (a subsidiary of JP Morgan Chase). PayPal’s entry into online credit card processing will give it a leg up on companies like Square, which users a physical card reader to process credit card transactions on iOs and Android phones and tablets.
The app allows users to process mobile payments by centering the picture of a credit card squarely in the middle of any cell phones’ camera. At present, many companies are chasing a check processing app which would allow customers to deposit checks automatically with their mobile device. ING Direct allows for deposits of up to $3,000 through their mobile check processing app.
A move to mobile could significantly reduce the role of payment processing companies in the credit card space. Recently the courts saw a case between payment processors and the major credit card companies. While the case was never decided in the courts, the two parties agreed to significantly change contracts to allow for companies to charge fees to accept credit card payments. The move would affect rewards cards as well as the benefits extended to consumers from credit cards. So far, the effect of the law is yet to be seen, but PayPal’s entry into mobile payment processing could be the catalyst necessary to change the credit card processing industry.