Competition Heating Up For Mobile Payment Acceptance, And For More Services

Competition to secure merchant users of mobile payment-acceptance services is on the rise. As a result, many companies have begun offering various options to appeal to small merchants.

Square Inc. initially led with way with a low-cost service, but other companies are increasing the competition by offering similar deals. But many of theirs also help merchants better manage their business, whereas Square’s does nothing more than support card acceptance.

And the added functionality could be the key differentiator to secure the merchant deal. In fact, at least one entrenched terminal maker is counting on it.

Indeed, the more features included with a mobile payment-acceptance service the better, especially if the features help merchants make more money, Adil Moussa, senior analyst with Boston-based Aite Group LLC, tells PaymentsSource.

Companies deploying mobile-payment acceptance services should focus on what they can do to meet the needs of smaller merchants, Moussa says. “Merchants will most likely pay for something as long as they see they value for their business,” he contends.

Some merchants may be content with a simple card-acceptance service such as Square’s, but others may be “more willing to pay slightly higher if the service is more personal and meets their needs,” says Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.

Subsequently, many small merchants may consider companies that offer not only a low-cost option but also additional features that give them more bang for their buck.

One company hoping to appeal to such merchants is Troy, Mich.-based ISO North American Bancard. North American developed its PayAnywhere mobile point-of-sale acceptance service for smaller, service-oriented merchants by offering an affordable pay-as-you-go method (see story).

North American Bancard designed PayAnywhere for merchants that do not necessarily transact every day or every month, Marc Gardner, the ISO’s president and CEO, tells PaymentsSource. Merchants pay 2.69% of each swiped sale and 3.49% for keyed-in transactions. They also pay 19 cents per transaction for debit and credit card transactions.

“Merchants do not pay any fees if they are not swiping or keying in cards. So if they have a seasonal business, they don’t pay fees during the off months,” Gardner says.

PayAnywhere works on Apple Inc. iPhones, and the company plans to extend it to both Google Android devices and Research In Motion Ltd.’s BlackBerry phones this spring.

Besides payment card acceptance, North American also prides itself on its customer service. Unlike Square, which deals with customer issues only online, North American offers customers several options when they need help, including over-the-phone service.

The company employs a team of 400 in its Detroit office to “provide immediate service to its customers and not just offer one line of communication such as e-mail,” Gardner says. “We have people here to take the calls and handle tech support, customer care, deployment and replacement hardware requests,” he adds.

The service also enables merchants to see which location or which sales representative is performing the best. It also enables merchants to see all their sales at the same time on a specific day, Gardner explains.

The additional features included with PayAnywhere are beneficial, Mike Hagen, owner of VIP Services LLC, a Detroit-based limo service and PayAnywhere user, tells PaymentsSource. The built-in reporting system is helpful because “I can zoom in on my transactions for each day, week or month either on the phone or online,” Hagen says.

Moreover, the service’s ability to integrate with the phone’s satellite global positioning system “enables me to print the exact location of the sale on the receipt and issue an electronic receipt so the customer won’t lose it,” Hagen notes. This is beneficial for customers requiring proper documentation to expense the ride, he adds.

PayAnywhere also touts an easy and quick enrollment process. “We ask a few questions, and merchants can get up and running within minutes of submission,” Gardner says.

The three-minute enrollment process includes a list of about 9 questions, which North American uses to confirm the merchant’s identity and credit screening. The company also includes the questions to make sure it wants the merchant as part of its payment community, he adds.

Also hoping to appeal to small merchants, Intuit Inc. in January announced it is offering its GoPayment mobile-payment service with free card readers and no monthly service fees to merchants who signed up by mid-February (see story). But because of the large response from merchants, the Mountain View, Calif.-based company decided to continue the offer indefinitely (see story).