Get All Access for $5/mo

What PayPal's Partnership With Discover Means to Business Owners and Consumers Starting next spring, merchants will be able to accept PayPal through their existing relationship with Discover card.

By Mikal E. Belicove

Opinions expressed by Entrepreneur contributors are their own.

What PayPals Partnership With Discover Means to Business Owners and Consumers

The announcement last week that PayPal is partnering with Discover Financial Services to offer a retail "digital wallet" payment option could result in a windfall for millions of brick and mortar merchants who already accept the Discover Card.

Beginning in May of 2013, PayPal's 50 million customers in the U.S. will be able to use their service as a payment option at any of the 7 million U.S. retail stores that accept Discover card. That's good news for merchants, because no additional hardware will have to be installed or upgraded to accept PayPal.

Related: The Pros and Cons of Mobile Payment Services

The offering is also simple for PayPal users, who will be able to make purchases at participating stores and businesses by using their cell phone number and a PayPal pin code. As the program evolves, PayPal plans to provide users with a card that is connected to their PayPal account.

PayPal, a division of eBay, is known as a leader in online payment and, since its beginnings in 1999, has proven to be an easy way for consumers and online merchants to send and receive money. Discover card ranks second behind American Express in overall customer satisfaction, according to the latest figures from J.D. Power and Associates' U.S. Credit Card Satisfaction Study.

PayPal and Discover aren't alone in developing a mobile payment program. Recently, a collaboration of leading retail companies, including Best Buy, Target, 7-Eleven and Walmart, formed a joint venture called the Merchant Customer Exchange to offer a new platform for smartphone-based transactions, and mobile payment processor Square has partnered with Starbucks to give consumers more payment options at Starbucks locations. The rapidly evolving mobile commerce landscape, helps retailers increase customer engagement and drive incremental sales.

Related: PayPal Here Joins Mobile-Pay Apps Already There

Since consumers can choose to fund purchases using their checking account, savings account, or any credit card account they have on file with PayPal, retailers who accept Discover card can expect to see the use of PayPal digital wallet to drive sales and engagement from the offline world to online.

Related: How to Protect Customer Data When Using Credit-Card Plug-ins for Smartphones

PayPal hasn't settled on the fee it will charge merchants when consumers use PayPal to make a purchase, a portion of which will be paid to Discover for use of its network.

If your business doesn't accept Discover, does the company's new partnership with PayPal cause you to rethink accepting their card? Let us know what you think in the comments.

Mikal E. Belicove is a market positioning, social media, and management consultant specializing in website usability and business blogging. His latest book, The Complete Idiot’s Guide to Facebook, is now available at bookstores. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

These Sisters Started a Side Hustle After a 'Light Bulb Moment' Led to a 'Versatile' Product. Now It's Done Over $45 Million in Sales.

Co-founders Lauren Stephens and Kaki McGrath, along with their mother Bonnie Dudley, turned everyday-wear brand Dudley Stephens into a multimillion-dollar success.

Side Hustle

New Research Reveals the Most Profitable Side Hustle — and You Could Make an Extra $15,000 a Year From Home

If you're ready to start a side hustle, it pays to consider which one will give you the greatest return.

Business News

'Unreal and Dystopian': Apple Intelligence Is Summarizing Breakup Texts So You Don't Have to Read Them

A viral post viewed over four million times shows what happens when AI reads your texts before you do.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Starting a Business

Why Every Athlete Should Think Like a Startup Founder

Whether you're a high-profile star or a lesser-known athlete, thinking like a startup founder can unlock long-term financial stability, emotional fulfillment and career longevity.