Belt Valley Bank is small even by community bank standards—it's got about $62 million in assets and 18 employees. But it has the tools to compete directly with the likes of Square for accepting payments on mobile devices.

Belt Valley Bank plans to soon offer Fiserv's SpotPay, a mobile card reader the Wisconsin-based vendor sells almost exclusively through banks. The Belt, Mont.-based bank's small size fits Fiserv's use case quite well.

"It's a small town, we have the one bank on the main street," says Tammy Ogle, assistant operations officer for Belt Valley Bank. "We have small-business accounts that require the business owners to have to travel to make repairs and do other work. [SpotPay] would be handy for them."

The mobile card reader is also a good fit for pizza shops and other small merchants that would otherwise have to direct their customers to an ATM, Ogle says.

In offering SpotPay, Belt Valley Bank is going up against dedicated payment companies like Square and PayPal, as well as more diverse companies like Intuit and Groupon. Those companies may seem like fierce competitors — but they're all based in California, and their distance works to Belt Valley Bank's advantage.

"There is one merchant that I spoke with that has heard of Square because of its advertising, but they would like to stick to its home area, so they asked us if we had a similar technology," Ogle says.

SpotPay, like Square, plugs into a mobile device to allow micro-merchants to accept swiped card payments. Fiserv launched the device in October, and says hundreds of banks and credit unions have since signed up to offer its reader.

Fiserv helps its clients market the SpotPay reader online. The vendor recently launched a website that can rebrand itself on the fly to match the bank account of the merchant signing up. Belt Valley Bank will also offer a link on its own website to enroll merchants in SpotPay.

SpotPay is "a good product for smaller banks and credit unions who want to move faster for mobile acceptance," says Christine Pratt, a senior analyst at Aite Group.

If banks can offer mobile acceptance directly to small businesses, they stand a good chance of winning the client, Pratt says.

Though Square and its rivals sell their readers on the shelves of many large retailers, "small businesses tend to trust their bank more, or they trust technology more if it's offered by their financial institution," Pratt says.

Fiserv's plans to improve its SpotPay reader, such as by offering instant access to funds scanned from a check, helps the banks in their sales pitch, says Zil Bareisis, a senior analyst at Celent.

"The integration between card acceptance and check payments is not something that many of the mobile acceptance firms have done," he says, adding the fast pace of mobile acceptance tech development across the market demonstrates the function has grown beyond its "niche" status.

"It's starting to fundamentally change the acquiring business," he says. "Banks are taking notice and trying to come up with offers to compete with [card acceptance] services."

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