By Autumn Cafiero Giusti
ISOs that fail to offer mobile payments to merchants will not survive, industry observers say.
Yet plenty of ISOs still don’t include mobile payment capabilities in their suite of products and services, vendors say. Some seem simply out of touch with the industry. Others fear competing with the likes of Square Inc. and other third parties that offer free card readers and low rates to the mass market.
Of the ISOs and agents ready to commit to mobile payments, many face information overload and don’t know where to begin. The mobile market remains in its infancy, and everyone from technology companies to processors are flooding it with innovation that may or may not take hold.
If it’s a question of not knowing where to begin, ISOs and agents can still thrive by latching on to a progressive vendor, reading industry reports, attending trade shows and surveying the products on the market, observers agree.
Go Mobile Commerce LLC, for example, regularly fields calls from frustrated agents in the field, says Heather Mickelson, founder and president of the Tacoma, Wash.-based mobile technology company. That’s because ISOs have been slow to offer mobile to merchants, and agents are losing clients because of it. Many of the agents Mickelson encounters don’t even offer a card swipe attachment for the smart phone.
In many cases, ISOs are holding up the works because they haven’t noticed the changes taking place in mobile. Meanwhile, agents are struggling to meet merchants’ demands and growing tired waiting for their ISO to catch up.
“The agent is the eyes and ears of the ISO,” says Mickelson. “And it’s unfortunate because if the ISO doesn’t see it soon, they’ll see significant changes in their operation and lose clients.”
The demand for mobile payment acceptance and tablet point of sale systems has shot up seemingly overnight. Mickelson points to her website’s hits as evidence. Four years ago, 80% of the site’s hits came from the search term “wireless credit card machine.” Today, 80% of hits come from the term “iPad credit card reader.”
It’s evidence that ISOs need to change to serve the new market, Mickelson says.
“Mobile is growing and here to stay, and it’s not just delivery drivers and farmers’ markets anymore,” she says. “It’s now in the retail and restaurant arenas.”
To the ISOs that don’t think joining the mobile fray is worth it — given the emergence of Square and other rivals — industry observers say think again.
ISOs that are succeeding in the mobile space have found that security, reliability, faster funding and better service gives them a competitive edge over the third-party card readers.
Never underestimate the power of the tablet, Mickelson says. Ultimately, it is an all-in-one credit card machine and point-of-sale device.
“Agents only selling a standalone credit card machine are doomed,” she says. Merchants realize that far better and more affordable mobile technologies are available.
Some ISOs argue that offering mobile services seems pointless, because they simply can’t compete with Square and other third-party card readers.
They have good reason to worry, says Aaron Greenspan, president and CEO of Palo Alto, Calif.-based Think Computer Corp., which operates the FaceCash prepaid mobile payments system. FaceCash is designed to get around the credit card system and deals with merchants directly.
Greenspan believes that merchants are going to be looking for lower prices, and the more people that are part of the product chain, the higher prices are going to be. The market will demand fewer intermediaries, not more, he says.
“Unless you’re the root technology provider, there’s less of a chance you’re going to be necessary,” Greenspan says.