If you popped into Betty’s Speakeasy, a cupcake shop in Philadelphia, last Saturday, then you probably saw co-owner Dylan Snow taking pictures of pastries using an iPad 2. After years of doing retail business with traditional machines—a cash register and a card-swipe reader to process customer credit cards—Betty’s is doing away with both and replacing them with an iPad.
While the iPad, loaded with the new Square Register app, offers a number of business-friendly features, Snow is happiest that the app replaces his traditional card-processing service, which charged both a monthly fee as well as a cut of transactions—the rate of which varied depending on the type of card used. Instead, Square just takes a 2.75-percent cut of every transaction swiped through the iPad—a reduction in expenses for Betty’s that means bigger profits.
“Right now we’re paying $69 a month in merchant services to swipe credit cards,” Snow said. “We won’t pay that with Square. [The new iPad] pays for itself very quickly.”
Such stories are behind the growing market for iPhone- and iPad-based card-swiping systems like those offered by Square. PayPal recently announced that it is launching its own card reader and app for iOS; it joins a sector that also includes big players like VeriFone’s Payware and Intuit’s GoPayment. (That list doesn’t even include Google Wallet, which is currently compatible with only the Nexus S 4G Android phone.)
Turns out there’s big business in catering to small businesses and independent vendors like food trucks and farmer’s market vendors.
“The target market for these products are small businesses who otherwise would be cash-only,” said Denée Carrington, an analyst with Forrester Research, adding: “Merchants can now capture revenue that previously could have been missed altogether if the consumer didn’t have cash.”
While most of the card-reader services can be used on a variety of mobile platforms, iOS devices have led the way—due both to their “cool factor” and, according to users, their simple sturdiness. And they point out that if the hardware does have a problem, it’s quicker and cheaper to go buy a new iPad than it is to wait for a delivery from a business-supply warehouse.
“We needed more reliable hardware,” said Snow at Betty’s Speakeasy, “and that was the iPad.”
Buying an iPhone or an iPad is the easy part, though. How do merchants choose between services? All provide a free app and a free card-reader to attach to your iPhone and iPad. But there are some differences.
Intuit GoPayment: This service offers two tiers—a free service that charges merchants a 2.7-percent fee for each swiped transaction, or a $13-a-month service for high-volume users, which drops the transaction fee to 1.7 percent. (That’s if you use the card reader; you can key in a credit card number via your iOS device’s touchscreen, but Intuit charges a higher fee for those transactions.) Intuit also offers integration with its QuickBooks small-business software, which might ease a merchant’s paperwork hassles. Vendors are promised access to their money within two to three days of the transaction.
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