Clip, which sells mobile payments technology in Spanish-speaking markets, has developed a mobile card reader.
The company's service includes a mobile app and an encrypted reader that allows an iPhone or Android device to accept card payments. It also uses SMS as a second factor to authenticate the identity of consumers and merchants.
Users insert the Clip reader into the headphone jack of a smartphone, and open the free Clip app. The user enters the amount to be paid, and swipes the card on the reader. The cardholder is asked for their mobile phone number and receives a 4-dight code via text message. The user then enters the code on the merchant's Clip app. If the code matches, the customer signs and receives a receipt via text message or email.
Clip will charge about 3.5% for transaction fees in Mexico, its initial market.
"Banks in Mexico have focused on large merchant acquiring and card issuing but have significantly underinvested in creating acquiring for [small businesses] and individuals," said Vilash Poovala, co-founder and CTO of Clip, in an email. Poovala formerly worked for Visa, where he helped launch the V.me digital wallet with 33 electronic retailers in the U.S. He also worked on proximity pay and emerging markets at PayPal.
Clip's team also includes Adolfo Babatz, the company's co-founder and CEO. Babatz formerly worked for PayPal, where he was responsible for customer engagement for PayPal Latin America. He also led the team that introduced PayPal to Mexico.
Clip aims to sell mobile acceptance in Mexico, where it can be tough to obtain a point of sale terminal—the process, which has more than two dozen steps, involves paperwork and a pre-existing network of multiple acquiring relationships.
"Imagine an individual, or a doctor or a pharmacist generating enormous amounts of documentation that large businesses are capable and staffed to be able to do. This is stifling to say the least," Poovala said in an email.
Other companies targeting Latin American merchants with mobile card acceptance include Evertec. Square, the most recognizable brand in mobile card acceptance, has expanded into Japan and Canada, but has not discussed further moves outside the U.S.