Mobile POS: Can Proponents Make Good On Their Promises?

Why so many ISOs, acquirers, and point-of-sale software and hardware makers are excited about putting advanced mobile POS equipment into merchants’ hands is not difficult to grasp. Such systems may generate additional revenue not only from existing clients, but also possibly from merchants who previously could not or would not accept payment cards.

With a potential market of 16.4 million merchants for mobile POS products, according to a recent estimate from the Mercator Advisory Group Inc., the ISO and acquiring industry is well poised to grow that market. But to succeed, it will take a concerted effort to locate the merchants and determine what they need and how to sell it to them.

“Certainly there are mobile locations being set up,” says Todd Ablowitz, president of
Centennial, Colo.-based payments consultancy Double Diamond Group LLC. But “it’s hard to know exactly how many,” he says.

ISOs and acquirers may very well count merchants as willing allies in their push to sell mobile POS acceptance, Richard K. Crone, CEO of Crone Consulting LLC of San Carlos, Calif., told attendees at the Western States Acquirers Association conference in San Diego Oct. 14.

The goal is to capture a share of the $6.2 trillion U.S. consumers spend at the point of sale, Crone says. Merchants want mobile POS acceptance
because it can help lower their processing costs, increase their marketing capabilities, and enable them to capture consumer data, he says.

Many mobile POS applications can capture customer e-mail addresses and other information. But some companies may have an advantage over others.

Because they already possess consumers’ mobile identifiers­–their cell-phone numbers–and their payment information, wireless telecommunication companies are positioned to “level the playing field entirely,” Crone suggests.

AT&T Inc., Verizon Wireless and T-Mobile USA are said to be working together on a payments system along with Discover Financial Services and Barclays PLC. The consortium reportedly plans to test the system in Atlanta and three other U.S. cities.

ISOs and acquirers can play a role in that setting because they have the sales staffs that have the direct merchant connections, Crone says.

“This is a greenfield opportunity for ISOs
because the people building this need ‘feet on the street’ to build this business,” he says, referring to the payment scheme. “Merchants are ready to hear their story.”


  What Do They Need

Understanding merchant needs is vital, John Barrett, senior vice president of independent sales services at Atlanta-based First Data Corp., tells ISO&Agent. “We have seen some ISOs be very successful going after very small merchants,” he says.

Offering mobile POS services expands a sales agent’s revenue potential, Barrett adds. “It allows an agent to be a lot more creative in terms of a marketing strategy and the market they go after,” he says.  “If it’s a weekend merchant, a smart phone app may be a very good fit.”

For example, one sales agent experienced
success signing up beach vendors for merchant accounts accessed with a smart-phone application,
Barrett notes. “The more creative [a sales agent is], the more he can open up their distribution,” he says.

Some evidence supports this assertion.

“A lot of the people are calling just for [a mobile application],” Scott Rutledge, president of The Phoenix Group, a POS-equipment distributor, tells ISO&Agent. Typically they are not the quality of merchant that would want or be approved for a merchant contract, he says.

The O’Fallon, Mo.-based company refers merchants to any of the more than 300 ISOs with which it works, Rutledge says.

ISOs also may find it less expensive to sell mobile POS services to merchants already in their portfolios, says Rutledge, noting that is where many of Phoenix’s ISOs have had success. An ISO benefits because mobile POS
services simply add to the revenue generated by existing merchants, he says.

Besides incremental revenue, ISOs may find merchants less likely to switch to a competitor if they use multiple products from one company, suggests Chris Justice, president of Ingenico North America.

Ingenico S.A., a France-based terminal maker, is reselling Roam Data Inc.’s
mobile POS software, which merchants may use with virtually all cell phones. San Jose,
Calif.-based VeriFone Systems Inc. has a phone-base product available called PayWare Mobile.
Hypercom Corp., a terminal maker based in
Scottsdale, Ariz., announced its iPhone-compatible POS-terminal product earlier this year.

Other mobile POS products come from Square Inc., a San Francisco-based company that offers merchant processing with no contract, and technology companies and ISOs, such as Boston-based
Merchant Warehouse Inc., that developed mobile-payment software.