Given the number of mobile payment companies targeting small business, there's lots of slicing and dicing of the market in the name of differentiation.
One niche, freelancers or "solopreneurs," never hire a staff or maintain a storefront and thus are not typically in the market for payments hardware; the checks and cash they accept as consumers serves them just fine.
"This is the very smallest of businesses, the trades, the contractors, the plumbers, dog walkers, or electricians," said Greg Waldorf, CEO of Invoice2go, a company that is using technology from Stripe to offer mobile payment acceptance from within its invoicing app. Invoice2go also recently raised $15 million from Ribbit Capital to launch additional merchant services for small businesses.
"The contractors were on their own with payments before," Waldorf said, adding that mostly included cash or check transactions. "They had to manually mark payments as received, market their invoices as paid and handle other tasks related to payments by hand."
Invoice2go charges invoicing fees based on volume and 2.9% plus $0.30 per payment. Its Stripe-powered service is designed to benefit the large percentage of freelancers who report having trouble collecting payments. About a third of the U.S. workforce works on a freelance basis.
The mobile payment feature publicly launched last week following a beta period that included LeRoy Francis, a Hayward, Calif.-based video production freelancer.
"I was hindered by only offering clients the option to pay by check, something many found inconvenient," Francis said.
Most of the clients Francis works with expect 30 day payment terms, and generally use all of that time to send a check. Adding the mobile payment option to his invoices has reduced the payment times to about four days, Francis said.
Invoice2go hopes to build a payments business on top of the scale of its digital invoice business, which has more than 200,000 clients that send more than $1 billion in invoices each month.
Invoice2go is entering a crowded market, where differentiation and diversification have become key. Square has traditionally targeted small to medium sized retailers, for example, while Flint serves the same merchants without hardware.
WePay offers application programming interfaces that allow e-commerce platforms to build payments interfaces. PayPal and Square also offer merchant credit. Stripe has also made inroads into supporting social networks' buy buttons.
"The difference between us and Square is our merchants don't get paid right away," Waldorf said. "And in our case the payments tend to be larger than a small merchant."
Invoice2go also faces competition in its own niche from companies such as Buck Mobile, which lets business owners send invoices to any mobile phone and receive payment by credit card.
Additionally, larger merchant technology companies can offer many of the same services.
Accounting suppliers like Intuit often bundle invoicing with accounting platforms, said Rick Oglesby, head of product consulting and market research for Double Diamond Payments Research.
"Invoice2go, however, has customized the product to the needs of a specific target market as opposed to taking a horizontal strategy," he said. "This sort of approach is increasingly important in today's market as payments are backwards-evolving from commoditized to specialized."