PayPal has acquired iZettle in May 2018 in a $2.2bn deal. This review is about PayPal Here, a device identical to what iZettle used to sell until June 2016, before launching its internally developed iZettle Reader (which we have reviewed here).
Given that PayPal said the iZettle acquisition is “going to create a European centre of excellence for us on a technical perspective,” potential new clients would be well-advised to take a look at the newer iZettle technology before committing to the PayPal Here card reader featured below.
- Highs: No lock-in or monthly fees, and you can send electronic invoices. Integrated with your online PayPal business account.
- Lows: Complex fee structure with the least competitive rates for small businesses. Only accepts the most popular card brands.
PayPal Here, PayPal’s chip and PIN card reader, has a lot in common with the other leading mobile card readers in the UK, iZettle Reader and SumUp Air. But before you make your final decision, there are three important differences you should be aware of: price, functionality and accepted cards. So let’s see how PayPal compares with the UK competition (continued below the table).
|Solution type||Chip & PIN reader + mobile app||Chip & PIN reader + mobile app||Chip & PIN reader + mobile app|
|Card reader price||£45 excl. VAT|
|Chip card transaction fee||2.75%–1.0% depending on sales volume||1.75%||1.69%|
|Swipe card transaction fee||3.40% + 20p||1.75%||1.69%|
|Settlement delay||Instantly to PayPal account, additional time to bank account||1-2 business days in most cases||3 business days in most cases|
|Device size||10.3 cm x 7.1 cm x 1.8 cm||11 cm x 7 cm x 2 cm||8.4 cm x 8.4 cm x 2.3 cm|
|Full review||Full review|
|Chip & PIN reader + mobile app||Chip & PIN reader + mobile app||Chip & PIN reader + mobile app|
|Card reader price|
|£45 excl. VAT|
|Chip card and contactless transaction fee|
|2.75%–1.0% depending on sales volume||1.75%||1.69%|
|Swipe card transaction fee|
|3.40% + 20p||1.75%||1.69%|
|Tipping in app|
|Instantly to PayPal account, additional time to bank account||1-2 business days in most cases||3 business days in most cases|
|10.3 cm x 7.1 cm x 1.8 cm||11 cm x 7 cm x 2 cm||8.4 cm x 8.4 cm x 2.3 cm|
|Full review||Full review|
The PayPal Here card reader is similar to what used to be called iZettle Contactless Pro before it upgraded to the iZettle Reader. Even though PayPal Here is rather bulky compared with the sleeker iZettle and SumUp card readers, it is actually a few grams lighter.
If you use an Android, make sure it has Bluetooth 2.0 or higher. Samsung Galaxy users beware: PayPal Here does not work with certain models, including the Galaxy Ace, Galaxy Ace Advance and Galaxy Pocket. Windows phones are not compatible at all with PayPal Here.
How does it work?
PayPal Here allows small businesses to take payments anywhere. It is suitable for any business that’s looking for an initially low-cost card reader (although pricier than iZettle and Square readers) with no monthly costs apart from transaction fees.
It’s good for businesses on the go, e.g. food delivery services, cab drivers, market stall holders and festivals.
You’ll need to get the PayPal Here card reader and download the free app on your mobile device, available on Android devices, iPhone and iPad. The chip and PIN reader must be connected to the mobile app via Bluetooth.
PayPal Here’s contactless card reader connects via Bluetooth to a smartphone or tablet running the PayPal Here app
The first version (v.1) of PayPal Here launched in 2013, but it was phased out after the current v.2 card reader (which accepts contactless payments) launched in mid-2015.
PayPal Here is only available for businesses – and only businesses with an approved PayPal business account.
Standard cards supported
PayPal Here supports Visa, Mastercard, Maestro and American Express. For amounts up to £30, customers can tap their contactless card on the device without entering their PIN. Manual entry and swiping cards are also possible, but these incur extra fees (see below).
PayPal and SumUp’s card offerings are fairly similar, the difference being that SumUp also offers V Pay. On top of what PayPal Here and SumUp offer, iZettle also accepts UnionPay, Diners Club and JCB.
Apple Pay and Google Pay (formerly Android Pay) are both compatible with PayPal Here, but Samsung Pay is still not. Apple Pay transactions of over £30 are now also accepted by PayPal Here.
PayPal Here charges and fees
This is a big topic, and it’s where PayPal Here falls short of the competition, firstly because the fees are higher, and secondly because – for a “simple” pay-as-you-go system – the fee structure is incredibly complicated.
Getting the card reader is the easy part. It normally costs £45 + VAT but is occasionally on offer. Given that you then own the terminal and have no further monthly rental charges, it is affordable. Shipping is included for UK addresses. The accompanying app is free on iPhone, iPad and Android devices.
It’s with the transaction fees that things start to get difficult (the table on the right will give you some idea). Your rates depend on your monthly sales volume, type of cards used, and whether the card payment was made via chip, contactless, swipe or manual entry. Whether the card was issued in the UK or not is another cost factor.
Visa and Mastercard can qualify for a processing rate lower than 2.75% if your total monthly sales from cards is over £1,500. Amex is always processed at the top rate of 2.75%, and higher if swipe or manual entry is used.
Chip and contactless
Chip and contactless
Manual entry and swipe
|Foreign cards||+ variable fees|
The simplified rates-by-card table above shows the blended pricing rates. There are, however, two types of pricing structures to choose from: Blended pricing and an Interchange Plus plan.
The fee structure for Interchange Plus includes two elements: the interchange fee set by Visa and Mastercard and the fee set by PayPal. Blended pricing is more predictable – you pay one rate regardless of type of interchange fee charged by Visa and Mastercard.
|Total monthly sales||Blended fee||Interchange Plus|
|Up to £1,500||2.75%||IC + 2.5%|
|£1,500.01 – £6,000||1.75%||IC + 1.5%|
|£6,000.01 – £15,000||1.5%||IC + 1.25%|
|£15,000.01 – £25,000||1.0%||IC + 0.75%|
|£25,000+||by arangement||by arrangement|
IC = card interchange rate. Varies from 0.2% to 2.0%
There are some exceptions to the above rates. Manual entry of card details or swiping the magnetic stripe costs 3.4% + 20p (Blended fee) or IC + 3.15% + 20p (Interchange Plus). American Express cards are charged at 2.75% for chip and contactless payments and 3.4% + 20p for manual entry and swipe. Additional cross-border fees for cards issued outside the UK may also be applied.
Interchange Plus is worthwhile for more mature businesses that predominately accept debit cards.
Most debit cards issued in the UK and the European Economic Area carry a 0.2% interchange fee. This would make the total transaction charge 2.7% for a monthly sales volume below £1,500 if you only accept UK-issued debit cards.
As soon as you start accepting credit cards, especially corporate cards, the charges become less affordable and for many businesses less acceptable. Corporate Mastercards typically apply a 1.6%-to-1.9% interchange rate. If you accept cards like these under the Interchange Plus plan, you pay 4.1% to 4.4% per transaction for monthly sales under £1,500.
Another difference is that with the Interchange Plus plan, your funds take 1-2 business days to reach your PayPal account, whereas with the blended-rate plan, your PayPal account is credited immediately.
SumUp charges a flat fee of 1.69% and iZettle a flat fee of 1.75% for all transactions regardless of card. Only PayPal applies a sliding rate starting from 2.75% (Blended plan) although monthly sales must be over £1,500 before any reduction comes into effect.
PayPal charges additional fees for foreign cards, which can be a deal-breaker for some businesses.
The PayPal Here app experience
The PayPal Here app mimics a basic point of sale system. You can set up products for sale with images, add them to categories and set variants, VAT rates and discounts.
To enter a new sale in the app, either enter the amount manually or select an item from the inventory. Note that there are no inventory management functions to keep track of your stock.
Tipping is a nice feature in the PayPal app. You can set up suggested tips as a percentage or flat rate as part of the payment process. You can also set up your PayPal Here app for up to 200 users with different levels of permissions, track payments (including cheques and cash) and issue invoices and receipts.
On your PayPal account, you will see both online PayPal sales and sales through PayPal Here. This might be attractive for merchants who already conduct business online with PayPal.
The real advantage: PayPal integration
As we have seen, PayPal does not have the most competitive prices. Its device is more expensive, and unless your monthly sales exceed £1,500, you will pay lower fees with iZettle and SumUp.
What does make PayPal an attractive option for some businesses is the integration with an existing PayPal account used for online sales or phone payments. If you already receive a significant portion of your revenue through PayPal and you like the sales tracking it offers, sticking to PayPal for in-person payments can make life easier. And worth highlighting: the payments you receive in your online PayPal account will add towards your total sales volume a month, so this can potentially reduce your transaction fees.
Another great thing about PayPal integration is that you can use PayPal to sell online (integrated on your website), through the app, through easy invoicing (the customer receives an email with a payment link) and of course face to face with PayPal Here. There are, however, fees associated with all of these solutions, which can end up pricier than the card reader fees. But if you’re looking for one solution that fits all these needs, PayPal is certainly worth considering.
Finally, if your main concern is to receive the money from transactions as quickly as possible, you might prefer PayPal. Card transactions go straight into your PayPal account, and from there, you can manually withdraw that money to your associated bank account. This could be a fairly immediate transfer or take a few hours or more depending on your bank. However, you’ll always have to make this withdrawal manually as opposed to other payment providers who automatically transfer the money to your bank account in 1-3 working days.
PayPal is also known to be stricter around account holds and transaction limits than other payment aggregators (more on this further down), which could cause delays in making some payments available to you.
PayPal Here works with Star Micronics receipt printers that can be connected either via Bluetooth or WiFi depending on which model you choose. Star SM-L200, SM-S220i and SM-T300i are portable receipt printers that connect to your phone via Bluetooth. The paper width is 57 mm, 80 mm or 112 mm depending on which model you choose. These printers also work with iZettle – see our mobile printer review for more information.
Some of the compatible desktop printers include Star TSP654IIBi (Bluetooth) and Star TSP113 LAN/TSP143 LAN (WiFi).
If you decide from the outset that you need a receipt printer, you might be better off buying a bundle that includes the device and a printer that matches your needs. A cab bundle with a PayPal Here card reader, mobile Bluetooth printer, card reader mount and more is available for £323.
The PayPal Here cab bundle includes the PayPal Here card reader, portable Star SM-L200 receipt printer, mounts for the card reader and printer, receipt rolls, and power converter for the printer. Photo: PayPal.
What about customer service?
It’s no secret PayPal gets a lot of stick for its poor customer service. The company website covers everything you need to know when setting up your PayPal Here account, but getting help on more specific issues can sometimes be frustrating.
According to PayPal’s website, you can easily contact their UK-based customer support team by email, telephone or within the PayPal Here app. If you’re phoning, the team is available 8am–8.30pm Monday–Saturday and 9am–8.30pm on Sundays, but it can take sometimes take ages to get through.
The PayPal account limitation extending to PayPal Here
Many users of the company’s online payment service will be familiar with PayPal’s dreaded account limitations emails, notifying them that they will not be able to access their account or withdraw money until the “issue” has been resolved.
Within the first six weeks of PayPal Here’s launch in the UK, users who’d downloaded the accompanying app reported having their accounts frozen, leaving them unable to access existing funds for up to 30 days. Thankfully, we’ve seen fewer of these reports in 2017. We will continue to monitor the issue and update the review as and when we get more information.
Our verdict – and thoughts on the iZettle acquisition
Already PayPal’s largest market outside the United States, the UK is PayPal Here’s first attempt to penetrate the European mobile payments market – that is, until it acquired iZettle in May 2018. While the two companies continue to operate separately, we think that PayPal Here will maintain their offering, but is unlikely to evolve much further, and the mobile POS market leader iZettle will probably continue to innovate their product as usual.
That being said, we doubt PayPal would remove a service from their customers without an alternative, so we do not think the PayPal Here product will be phased out until they can recommend iZettle in a more integrated way with PayPal. So far, PayPal Here has been one of the more decent alternatives to iZettle and SumUp, especially as they last year invested in making the app more up to par with iZettle. Unfortunately, PayPal’s fee scales remain as complicated and uncompetitive as before.
But if you earn over £1,500 through PayPal, the transaction fees become more in line with iZettle’s (1.75%) and SumUp’s (1.69%) – that is, if you only accept chip and PIN or contactless and avoid Amex. The downside is you’ll need to keep up the sales volume every month to avoid being downgraded to the higher transaction fees the following month.
Let’s consider PayPal Here’s pros:
- Integrated card reader payments, cash, cheques and PayPal check-in
- Connected with your PayPal account and its invoicing, virtual terminal and e-commerce integrations
- Improved app experience since first version
- Useful resources on the website
As for the cons:
- iZettle and SumUp offer better rates and cheaper card readers
- You have to keep selling at least £1,500 a month to maintain lower fees
- Account holds and limitations can be a critical issue
- Manual entry, swipe, Amex and foreign cards have higher fees