PayPal partners with Discover to reach 7M US merchants

PayPal blasts into the offline world to reach the 7M merchants who use Discover

Just days after reports emerged that McDonalds is testing out a mobile payment offering via PayPal that would allow customers to pay with their phone, PayPal is breaking through an even bigger wall: actual credit card companies.  PayPal announced Wednesday that it is partnering with Discover to allow any merchant—food-related or otherwise—to begin accepting mobile payments.  Yeah.  Shit just got real.

More details will emerge later this morning at an eBay conference call, but for now, what we know is that in 2013, any consumer with a Discover card will be able to start paying with their PayPal account at participating merchant stores.  Merchants won’t have to install or upgrade any point-of-sale hardware or software—an attractive alternative to purchasing a Square dongle and an iPad.  Customers will simply see a sign in the store and know that it accepts PayPal payments.

The partnership will extend the potential for mobile payments via PayPal to some seven million U.S. merchants who currently accept Discover card payments.  And if all goes well, the new partnership could extend to the millions of merchants around the world who accept Discover.

PayPal currently has over 113 million active users worldwide, some 50 million of whom are in the U.S.

The partnership dwarfs Square’s recently announced partnership with Starbucks, which would bring mobile payments to the coffee chain’s 7,000 U.S. stores. 

Discover has been making a lot of headway in the mobile payments game this year.  Last week, Discover announced a deal with Google that would allow Discover customers to save their card information to Google Wallet.  And earlier this year, Discover partnered with BillToMobile to offer carrier billing to Discover’s e-commerce merchants.

And while Discover has been building up its mobile base, PayPal has been working on building up its offline base.  PayPal has partnered with a handful of brick-and-mortar stores to bring in-store checkout to its customers, including Home Deport, Hollister, and Abercrombie & Fitch.

“The establishment of this relationship is a major industry milestone, which will help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale," said Diane Offereins, President of Discover Payment Services, in a statement.

“This relationship quickly extends PayPal's reach to millions of merchant locations nationwide and is a milestone moment for us that will create new benefits for Discover merchants without requiring new hardware or software," said Don Kingsborough, PayPal's VP of Retail, in a statement.

Check back for updates after eBay’s conference later this morning.

Image source: reuters.com