SumUp's plan to create an end-to-end mobile payment system without reliance on third parties became a reality this week with the rollout of a chip-and-PIN mobile card reader and terminal system.
The PIN+ system will debut in Switzerland and Poland before entering other European markets, including the U.K., Germany, Italy and Spain in the coming weeks, London- and Berlin-based SumUp says.
The vendor continues to jockey for position in the crowded European mobile point of sale market, where several other players, including PayPal, are pushing for dominance.
SumUp's homemade approach will appeal to merchants because it keeps fees low, says Jan Deepen, co-founder and chief commercial officer for SumUp.
"Several companies outsource the processing to an acquirer, or the fraud piece to a security vendor," Deepen says. "We have done all of this ourselves, and we have our own payment gateway."
The "last piece" to completing an end-to-end system was for SumUp to have its own mobile point of sale, Deepen says.
SumUp sells the system to merchants for 79 euros and charges a 1.95% transaction fee. The PIN+ card reader is capable of accepting EMV-chip card transactions on iOS and Android handsets.
SumUp hired hardware manufacturers from established terminal makers who helped the company develop PIN+ over an 18-month period, Deepen says.
The PIN+ rollout comes nearly a year to the day after SumUp received significant funding from American Express and Groupon, saying it would use the financial backing to expand into more markets.
At that time, the company also secured a partnership with Svyaznoy Group, one of the largest card-issuing banks and smartphone retailers in Russia.
For the rollout in Switzerland, SumUp is working with UBS Bank, which will market the system to its merchant base, Deepen says.
Switzerland is a "super attractive country for mobile payments" because it has advanced technologies in place and high credit card usage among consumers, Deepen adds. Poland is appealing because it has many merchants who cannot accept credit cards, as well as a large population of young smartphone users, he says.
In addition to working with its bank partners, SumUp plans to handle its own sales and marketing, using its website and social media to spread the word. In that way, SumUp will be able to keep its system costs low, Deepen says.
But marketing will be vital in a mobile POS market that regularly has new entrants, says Gareth Lodge, a London-based industry analyst with Celent.
"There seems to be a hardly a day when there isn't a new vendor entering the market, or an existing vendor tweaking their offering," Lodge says. "The buyer is certainly not lost for choice."
Many mPOS developers are competing on "headline cost" rather than added value, and SumUp will eventually need to add value through loyalty or couponing programs, Lodge says.
Deepen says SumUp is initially focused on providing card acceptance in markets where merchants need that technology. The company also wants to build consumer trust in mobile card acceptance, Deepen adds. "Then the consumer will say, OK, now can I redeem coupons through this technology?"
When that time comes, SumUp will lean heavily on Bluetooth Low Energy technology for coupon redemption, Deepen says.
The PIN+ device connects to a smartphone or tablet through a headphone cable or Bluetooth.
PIN+ has received MasterCard mPOS Program certification. SumUp also has its mPOS hardware reviewed through the Visa Ready Program.