With newcomers like Square gaining momentum in mobile payments, processors are more aggressively offering customers reasons to stick with them as merchants accept more payments outside their retail stores.
USA Technologies Inc. is announcing today a method to accept card payments through mobile devices as its existing customers seek ways to accept payments for product deliveries, events and other aspects of their diversified operations.
USA Technologies' specialty is enabling vending operators to accept their mostly low-ticket purchases electronically through debit and credit cards instead of cash. The company bundles the small transactions to lower the overall cost of interchange.
"Merchants are looking for something that's turnkey; they don't want to go to separate companies," Stephen Herbert, the company's president, said in an interview, citing smaller retailers in particular. "We're wrapping it up into one package."
Another processor, Vantiv, last week said it plans to attract existing clients to use it for mobile payments by offering the same pricing it charges for transactions initiated at checkout lanes. Most of its merchants are traditional mom-and-pop operations.
USA Technologies' new ePort Mobile service will apply a competitive flat rate plus a monthly fee, Herbert says. He would not disclose the company's specific pricing, but said it "will be competitive in the marketplace."
USA Technologies is field-testing ePort Mobile with several clients and plans to offer it more broadly early next quarter, depending on the results of those tests and the feedback from customers. The service initially will support free smartphone and tablet application that use Apple Inc.'s iOS operating system, and versions for phones using Google Inc.'s Android operating system should be available later in the year, Herbert says.
USA Technologies' service will also work with card readers made vendors such as IDTech and Magtek, Herbert says, noting no vendor has exclusive rights. Basic readers will be free, though merchants will pay a yet-to-be-determined fee for more rugged commercial-grade versions, he says.
Transactions are encrypted twice, once at the reader before the information enters the phone or tablet, and again using a proprietary protocol the company uses to send data wirelessly for processing, Herbert says.
Such security is necessary for payments made from vending machines and other unattended systems. Though fraud is very low among the company's clients, vending machines tend to serve as branded storefronts, so the brands want to make sure their locations are secure, Herbert says.
USA Technologies provides hardware and software support to some 3,225 customers representing more than 163,000 connections on its ePort Connect service. It also provides customer service, reporting and processing connectivity, and USA Technologies is the merchant of record. U.S. Bancorp's Elavon processes its merchants' transactions.
USA Technologies may face pressure from competitors more familiar with the nuances of mobile-payment acceptance, says Todd Ablowitz, president of Double Diamond Group LLC, a Centennial, Colo.-based consultancy.
"It's logical for them to extend their product line as they have, but they need to recognize that there are a lot of challengers, or existing players, out there with more experience, some of whom also have a vending service," he says. "It's a competitive world, and you really have to bring it to succeed."