Microsoft Partners with PayPal on Retail Payments

Microsoft and PayPal announced this week that they are partnering to provide retailers with an all-in-one point of sale (POS) solution that includes a Surface Pro 3 tablet and a PayPal Here card reader. Aimed at small businesses, this solution will work like the suddenly ubiquitous Square readers that are usually paired with a smart phone or tablet. And it's coming to Windows Phone too.

"The new PayPal Here reader will include payment support for Microsoft Surface and other Windows devices through our efforts with Microsoft," PayPal vice president Brad Brodigan says. "Small businesses that use the PayPal Here reader, Windows 8.1 app, and SDK on these devices will benefit from the same world-class product features and customer support enjoyed by existing PayPal Here users."

The value proposition here, according to Microsoft, is that many small business retailers today have to maintain two devices: A tablet that is used with a (Square) card reader for transacting cash register-style business with customers and a laptop or other PC for inventory, supply, customer relationship information and accounting.

Here, we can see where Microsoft's tagline for the Surface Pro 3—"the tablet that can replace your laptop"—comes to life, because this solution lets small businesses complete both jobs with a single device. It's also worth noting that the Surface Pro 3's Pen provides a more natural customer signature pen than the usual system of drawing a doodle with your finger on an iPad screen like a two-year-old.

What's new here is mostly on the PayPal side. Late to the card reader game, PayPal will soon offer a PayPal Here card reader which—judging by its positioning in the supplied materials—connects to the Surface Pro 3 headphone jack, as does the Square reader. It will also provide a Windows 8.1 PayPal app to customers in the United States through the Windows Store. And a version for Windows Phone 8.1 is also on the way.

Additionally, third parties such as Anthro, ArmorActive, Heckler Design and ProClip USA will supply a variety of "fixed and portable enclosures in a range of form factors and colors" to complete the Surface Pro 3/PayPal retail experience.

Here's a video showing off how this will all come together.

Small business retailers in the US will be able to purchase this setup—the complete POS solution including Surface, the PayPal Here app and card reader and various point of sale hardware accessories—"later this year," Microsoft says. It will be made available through commercial resellers, Microsoft Retail Stores and select partner retail locations.