Mobile payment company iZettle is countering the idea that EMV compliance increases merchant expense by offering a free version of its mobile chip-and-PIN card reader.

Stockholm-based iZettle's no-cost Card Reader Lite is available for merchants using tablets and smartphones to accept card payments. The company will continue to sell its more robust Card Reader Pro model with a built-in display and wireless connectivity for $75.

“This is one of the boldest moves we have ever made,” Jacob de Geer, iZettle’s co-­founder and CEO, stated in a Feb. 15 press release. "Not only will it [the Lite reader] tear down barriers small merchants face when setting up their businesses, it also raises the stakes for Europe's payments industry."

Card Reader Lite is available to merchants in the U.K., Sweden, Norway, Denmark, Finland, Spain, Germany and the Netherlands. IZettle more than doubled its transaction volumes in 2014 and has established total annual volume at a rate of about $2.3 billion. The company plans to target the up to 20 million European small businesses it says still do not take card payments or have access to card-acceptance tools.

IZettle faces lots of competitors, which have been reluctant to provide chip-and-PIN hardware at no cost to merchants. Square, which long offered mag stripe readers for free, is charging $29 to $39 for its EMV reader. Square deems the charge necessary because EMV mobile acceptance is more complex, but is risking its relationships with merchants.   

IZettle expanded its mobile pay service into the Netherlands in November of 2014, giving away free card readers to the first 500 merchants who signed up for the service.

The free reader represents a significant move for iZettle because "they are not that cheap to make, particularly the chip piece," said Gareth Lodge, a London-based industry analyst with Celent.

However, Square has provided many services for its merchants while processing $30 billion in transactions annually, Lodge said.

Square has used "deep pockets to fund them through this growth period," Lodge added. "IZettle has not in a long time had a significant investment themselves."

The iZettle card readers are compatible with all major credit and debit cards. Merchants pay only when using iZettle, with transaction fees starting at 2.75% and falling to 1.5% for those with high sales volume, the company said.

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