PayPal launches mobile app-based payment system

Mobile payments should simplify sales, but 2.75% charge might put some off

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PayPal Here, a new mobile payment system, is now available in the UK.

The system has been designed to simply payments for small business who normally take cash-in-hand payments and don't have card reading machines.

Instead, payments are made by inserting the card into a PayPal branded card reader, which costs £99. The payment is processed on the seller's phone via a free app.

PayPal's own research shows that 72% of people are likely to pay a smaller business with card if card payments are offered and 61% of adults in Britain would prefer paying by card, rather than cash, for amounts lower than £50

The small print

There is, however, a 'small' charge levied with every transaction – 2.74% for every payment accepted with Chip and PIN cards and/or PayPal Check in.

Or a larger 3.4% plus 20 pence charge for card payments made by swiping the magnetic stripe or manually keying in the card details.

The additional cost could put some consumers off, especally when it wouldn't cost any more to simply pay by cash – even if this way is more convenient.