PayPal to take on Square with lower fees and spiffy blue design

PayPal is expected to show off a credit card reader tomorrow that will compete directly with Square’s product. Now we have a clearer idea of what the company is planning — and it could give Square a run for its money (literally).

PayPal will reportedly charge merchants using its card reader only 2.7 percent of every transaction, lower than Square’s 2.75 percent charge, two sources told Bloomberg. The sources said that the device will be shaped like a blue triangle, an obvious jab at Square’s design, and will sport a high-end design, courtesy of the Yves Behar-founded design firm Fuseproject, best known for designing Jawbone’s bluetooth headsets and wireless speakers.

Both of those details make it clear that PayPal is aiming for Square’s jugular. But, if true, they don’t seem like big enough improvements over Square to entice consumers away. Square could easily lower its transaction fees to compete, and a fancy design likely won’t matter much to people who just want to make payments easily. Square, which was founded in 2009, also has a huge head start on PayPal, and is free from the terrible customer service reputation that haunts PayPal.

Square isn’t PayPal’s only competitor either: Intuit’s GoPayment device, which also plugs into your smartphone’s headphone jack, has been available longer than Square (though doesn’t get nearly as much hype).

The card swiper will be just one of many strategies PayPal will use to be a prominent force in mobile payments. The company just showed off its digital wallet at SxSW, is currently dabbling in NFC money transfers and carrier payments, and has recently expanded its pilot payments program with the Home Depot to include all of the store’s locations. (VentureBeat’s Rocky Agrawal doesn’t have many nice things to say about the latter.)

VentureBeat will be on the ground at PayPal’s media event tomorrow, so stay tuned for more.