No Rewards, Rare Incentives: Why Pay with PayPal Cards In-Store?

By , dealnews Senior Feature Writer

PayPal is coming to a store near you. In an effort to extend its reach beyond the internet (and to checkout counters across the country), the payment service has forged an alliance with Discover Financial Services to allow retail stores that accept Discover card to also offer PayPal as a payment option. Formed last August, the alliance has brought PayPal to as many as 250,000 retail stores with big-name merchants like Home Depot, JCPenney, Toys "R" Us, and Foot Locker.

Last week, PayPal announced a plan to expand its mobile wallet service even further, increasing its availability to an estimated 2 million stores by year's end. But before PayPal can pop any champagne bottles, there are a few obstacles it must overcome. Walmart, the nation's largest retail chain, has said it will not accept PayPal inside its retail stores. Likewise, Discover is still only in negotiations with one of the largest merchant acquirers, Atlanta-based First Data Corp. But perhaps most pressing: PayPal needs to convince you, the consumer, to leave your easy-to-use credit card at home and instead reach for your PayPal card to complete your purchases.

Consumer Incentives for In-Store PayPal Payments

But before customers ditch their credit cards, they need to know how PayPal's mobile wallet works. Fortunately, it's simple. PayPal checkout essentially allows shoppers with a PayPal account to use their PayPal funds for purchases at any brick-and-mortar store that accepts Discover cards. To checkout, shoppers can either request a physical PayPal card from the company (which can be swiped like any credit or debit card), or if they prefer to go card-less, they can enter their mobile phone number along with a 4-digit personal identification code (provided by PayPal) at any checkout counter equipped with a PIN reader.

"The benefits to PayPal in-store are the same as using PayPal online," says Jennifer Hakes, Director of Corporate Communications at PayPal. "You get unparalleled security, payment flexibility, and a super easy way to make purchases."

Initially, we saw PayPal offer a variety of Editors' Choice deals to entice people to try their new service. Many of these deals occurred during the holidays, when customers were especially looking for promos. For instance, during the week before Christmas, Dollar General, Guitar Center, Home Depot, and Nine West each took $10 off purchases of $30 or more when customers paid via PayPal. Toys "R" Us also offered $10 off purchases of $50 or more. Home Depot took the cake though and offered the most incentives, at times rewarding PayPal customers with iTunes gift cards or even donations to charities.

Despite that flurry of initial promotions, there are no discount codes currently available for using a PayPal card in-store, and there hasn't been one since mid-April. Moreover, PayPal doesn't offer a rewards programs for in-store use, which would incentivize between promos; the service is more about payment flexibility, though customers who choose to fund their PayPal account with a credit card that offers rewards will still be able to earn rewards on that card. That's not to say PayPal itself won't offer rewards down the line, but for the time being, the company is keeping things simple. Indeed, not only has it been since mid-April that we've seen a PayPal promo at all, but some retailers like Dollar General, Toys "R" Us, and Nine West haven't seen any specials since December.

Whether consumers will want to use PayPal at retail checkout is yet to be seen. And with stiff competition from the likes of Google and Square, to name a few, it could be some time before mobile wallets truly take off. Readers, where do you stand on mobile wallets? Do you think you'll use PayPal to pay in-store anytime soon?

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An avid gadget lover, Louis Ramirez has covered technology for Gizmodo, CNET, Laptop, and various other publications. Follow him on Twitter at @LouisRamirez.

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DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).


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You don't need a card AT ALL. It's private, I just enter in the phone number registered for brick and mortar buying with Paypal and then my passcode. I have used it in stores now at Abercrombie, American Eagle, Radio Shack, Home Depot, Office Depot and Radio Shack! I love it because sometimes I don't want to buy online with my Paypal dollars, I love using it in the real world and Paypal isn't giving or approving credit for this, it is just using your account dollars!! yeah!! it's awesome! I', waiting for a big one like Target to start taking it:)
The ability to use mobile payments in brick and mortar stores is pretty unexciting to me. Swiping my credit card into a Square reader is a little scary since can't help but worry that some hacker will figure out a way to create an app that hijacks my credit card. Transmitting payment authorization (rather than the actual credit card number) via NFC on a mobile phone or other device would feel much more secure. How convenient would it be to be able to use a credit card when the Girl Scouts come to your door with cookies.
I use paypal for ebay, and lately when I'm too lazy to go fetch my credit card if the paypal button is listed for payment anywhere else online. otherwise, I have debit and other credit cards to carry already. I'm guessing the places that refuse to accept Discover will also refuse to accept Paypal mobile wallet.

@invenio what kind of APR are you paying for your cashback credit cards? The ones offered to me always charge more APR than my non-cashback cards. 8-10% are my usual APRs.
daddyslipdisk, this Paypal Mobile wallet is more like a debit card on your Paypal account, and what you have is a paypal branded credit card. I think, invenio has it right, it could be a convienence for people who have bad credit & also don't have full service banking. You obviously have decent cretit :)
I've had a Paypal account for many, many years. I requested a Paypal credit card a few years back and have been using it everywhere. This is not something new or special. What I have is just a credit card with the Paypal logo on it that's accepted everywhere that Mastercard is accepted. Not sure what the importance of this Discover card deal poses.
I use it because it gives me easy access to my Paypal funding without the need of transferring the funds to my bank account and waiting a few days for that to occur. I can also use it at any ATM and take cash out if I need it. The only capabilities this current deal adds is the ability to punch in your phone and secret pin at a Paypal enabled reader if you don't have that card. I think that this is overkill beyond what they already do.
I'm now a bit wary of the PayPal offers...I took advantage of this Home Depot offer ( PayPal had where they would send me a $10 iTunes electronic gift card for a $50 purchase in store...I met all of the criteria with my purchase and have not seen anything from PayPal even though it was promised (via the offer) to come on 5/2...

I followed up with PayPal twice after 5/2 (including today, 5/7) and no one can tell me where the electronic gift card is although they have confirmed I qualified...
I would never get one as my credit card offers 1-3% cash back on purchases. However, I can see this for people who have very poor credit and do not qualify for a credit card (as all you need is a bank account for paypal). I guess it is also more secure as you need to enter a pin. With a credit card, somebody just needs the actual numbers printed on the card.

I generally hate paypal's outrageous fees but I do have an account as I buy things off of ebay and there really is no alternative.
Just like the Discover card, I would never use it, let alone apply for one. I have a paypal account and its only because Im forced to use it with Ebay.