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What's NFC? PayPal lobs Chip and PIN readers at UK small biz

Just as the world moves to pay-by-bonk

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Accepting credit cards just got even easier, with PayPal and iZettle both announcing Chip and PIN readers suitable for European markets where mag-stripes are considered passe.

PayPal Here has been around in the US for a while, allowing merchants to take credit-card payments into their PayPal accounts, but like rival service iZettle and the much-hyped Square it uses only the magnetic stripe - which is considered too insecure for European offerings. But now PayPal and iZettle have introduced Chip and PIN offerings, with wireless connections to smartphone apps, just as the industry moves on to NFC.

Neither device is much larger than the cards they read, and both sport a keypad and a Bluetooth connection to a smartphone app. iZettle manages a small screen, while PayPal's offering relies on LEDs to show success, but beyond the cosmetics there's not much to choose between the two.

Chip and PIN dominates credit-card payments across Europe, and has led to an immediate drop in fraud as thieves have had to move into cardholder-not-present transactions - such as internet ordering, which require a delivery address and other traceable details. Americans have so far stuck with magnetic stripes and signatures for securing physical transactions.

Verifying identity by signature is fraught with difficulties: while experts might be able to confidently spot a forged Hancock, the gas station attendant lacks those years of training and these days rarely even pretends to check, so America is being pushed relentlessly towards Chip 'n' PIN too, which might explain PayPal's interest in the tech.

Using a PIN everywhere does make it less secure, vulnerable to shoulder-surfing, but that's offset by the impossibly-difficult-to-copy chip embedded in the card, so our thief needs good eyesight and light fingers to profit from the deed.

PayPal Here is aimed at small businesses who don't have the margins for traditional card processors, though it joins a host of existing offerings including Sail from Verifone and mPowa, which launched its own Chip 'n' PIN offering last month.

Accepting NFC payments should require just a small tweak to the software, once the smartphones concerned all have NFC built in. But by then everyone will be jumping into the business, so the time to grab customers is now - as PayPal is well aware. ®

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