Bank of America Merchant Services says banks, which have a full view of each customer's financial needs, are well-positioned to succeed as mobile payments providers.

Clients say a mobile card reader, similar to what Square offers, "is the right entry point … [but] what people want and need is usually different,” says Derrick Carpenter, group product executive at Bank of America Merchant Services, a joint venture of B of A and First Data, during a panel discussion at SourceMedia’s 25th annual Card Forum and Expo.

“We give them something different whenever they sit down and [we] talk to these small businesses about what would work best,” he says.

Many new entrants have come to market with mobile card readers in recent years, including several from outside financial services. Companies like Groupon say their strength is in distribution, whereas companies like Intuit say they can provide a fuller experience by combining their products with business software.

But as the market becomes saturated with competing products the question remains — whose card reader will come out on top?

“Banks have communities of small businesses… they have a strategic advantage,” says Phil Philliou, a payments consultant.

Bank of America launched a mobile card reader, Mobile Pay on Demand in November. Fiserv, which has hundreds of bank and credit union clients, launched SpotPay mobile card reader last year, which it distributes almost exclusively through financial institutions.

While Square came to the market first, others should be able to succeed, says Philliou.

“When your strategic advantage is being first to market you need to get past that, because that’s where fast followers eventually overtake you,” he says.

He says Square hasn’t adapted its offering very much since it launched. Intuit’s GoPayment card reader, which integrates with QuickBooks Point of Sale, could capture more customers.

“The hurdle isn’t overcoming Square," Philliou says. "The hurdle is conveying to the micro-merchant that you’re the trusted entity."

Both execs emphasized that the mobile-payments market is still very new, so every player is trying to determine what merchants really want and need.

Correction: An earlier version of this story misidentified the speaker representing Bank of America. He is Derrick Carpenter, group product executive at Bank of America Merchant Services, a joint venture of Bank of America and First Data.

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