MPOS growth sparks bigger partnerships
The mobile point of sale market has grown far beyond its roots as an off-the-shelf dongle for smartphones. The category is now driving major acquisitions, collaborations and international deployments.
In just the past few days, ING and Mastercard have each made aggressive moves. ING this week began testing an NFC-powered Android app to enable small businesses to migrate away from cash payments. And on Wednesday morning Mastercard announced a collaboration with SumUp. These deals follow an earlier announcement that the Commonwealth Bank of Australia will use a white-label version of Mobeewave’s SoftPOS, a deal that later extended to Samsung devices.
These days, mobile point of sale isn’t a technology play as much as it is a marketing play, said Rick Oglesby, president of AZ Payments Group.
“There’s huge value in having a distribution channel that is able to attract small merchants that need and will use mobile point of sale solutions,” Oglesby said. “Banks are in a reasonably good position because small businesses very often need business checking accounts, so they will often sign up for business checking very early in their life cycles. That’s a good time to sell card acceptance too.”
Mastercard's SumUp collaboration will extend digital payment acceptance to micro, small and medium-sized businesses in 27 countries in Europe. Over the next five years, Mastercard and SumUp plan to deploy SumUp’s card readers on smartphones and wearables such as smartwatches and wristbands.
Mastercard and SumUp did not return requests for comment by deadline, but the two companies are positioning the partnership as a way to move European businesses away from cash payments. Cash is still a significant payment method for small businesses, even in larger markets such as Germany. But given a broader move away from cash among consumers, there’s pressure for both merchants and merchant acquirers to enable non-cash options. Mastercard and SumUp contend cash is more costly, risky and labor-intensive. Mastercard says its internal research shows new card payment acceptors see a 15% increase in average transaction size since the payment value isn’t linked to how much cash a consumer is carrying. Forbes reports ticket size may double when consumers use credit cards over cash.
ING is also positioning its deployment as a way to bring cash-heavy businesses to cards. It’s starting in Turkey, where 50% of purchases are still made in cash, according to the World Bank. ING also plans to expand the software-based mobile point of sale technology to other markets.
Like SumUp, Mastercard is also a partner with ING, whose app will permit businesses to track inventory and check transactions in real-time. This is a similar play to technology companies that sell mobile point of sale hardware and software by linking payment acceptance to other functions, such as appointment management and staffing, that small businesses typically handle manually or without staff.
But there’s more to these deployments, as Mastercard, ING and SumUp are pursuing merchants that are already being approached by competitors such as Square and PayPal. The mobile point of sale market in Europe is consolidating, with PayPal acquiring iZettle, a company often called the Square of Europe.
iZettle's product mix includes an e-commerce platform that's designed to make it easier for merchants to offer omnichannel services.
PayPal and iZettle's deal was a play to outflank Square, which is also expanding geographically, adding an online store to attract merchants in the U.K. and adding more financial services in all market, including a potential foray into banking.
Both Square and PayPal also offer merchant credit, which, when combined with payment acceptance, builds a range of services that rivals traditional card issuers. In this model, registering small businesses becomes a path to not just payment fee revenue, but lending and other functions.
“Most any payment provider that targets the large, small and micro business market wants to get a piece of the pie,” said Raymond Pucci, director of the merchant services practice at Mercator Advisory Group.
Mobile point of sale has been a success for companies like First Data, Pucci said. In First Data’s case, Clover has been a cog in a larger technology-driven transformation over the past few years that led to improvements in First Data’s economic performance and contributed to Fiserv’s deal to acquire First Data.
“There is also fact onboarding for merchant accounts and simplified fee structure for merchants,” Pucci said.
That Fiserv/First Data merger will bring First Data’s ample merchant capabilities to Fiserv’s huge international network of bank clients. The other large payment acquisition agreements announced this year — FIS and Worldpay; and Global Payments and TSYS — also combine bank and merchant technology in a way that changes the competitive landscape.
“[It’s] not just because of the payment transaction but because both offer a wide mix of integrated services and business tools including customer intelligence and inventory management,” Pucci said.