PayPal's European Vacation

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eBay's (NASDAQ: EBAY  ) PayPal is on the move. About a year after launching its payment-processing reader in the U.S. and a handful of other markets, the company is finally introducing the service in Europe.

Cracking into the European market was never going to be easy. That's because most credit and debit cards there use a chip-and-pin type of authentication, which is more complex than the swipe-based cards that U.S. shoppers have. Stateside, for small merchants that want to accept those swipe cards, eBay rolled out its PayPal Here product last March. That product is simply an attachment that plugs into mobile devices, allowing users to swipe credit cards and accept payments right from their smartphones.

But yesterday the company introduced its European version of PayPal Here, calling it a "game-changing product" in mobile payments. Through the combination of an app and a separate PIN device, eBay thinks it has an elegant solution to the technological challenges that have kept other mobile payment operators, like Square, out of the European market so far.

For eBay, this is an important step in its strategy to bring PayPal out of its online home and into the much larger world of physical transactions. The PayPal service already boasts 122 million active accounts. Now eBay's challenge is to get those customers to use PayPal for offline transactions, too. To that end, the company has been busy getting major retailers on board. PayPal is now accepted at over 18,000 locations from more than 20 national retailers, including Home Depot and American Eagle Outfitters. That's far from blanket coverage, but it's a start.

According to Reuters, eBay plans to charge a "nominal" fee for the European version of the PayPal Here device. And as for processing fees, the company expects to charge about 2.75% on each transaction, similar to what it charges small businesses in the U.S.


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