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Mobile credit card readers grow, with iOS as foundation

Joel Mathis | March 22, 2012
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.

VeriFone Payware: Like Intuit, there are two tiers of service here: The free version charges a 2.75-percent fee for each card swipe; a $10-monthly service lowers that rate to 1.95 percent. (VeriFone’s site includes a calculator to help merchants decide which option makes the most financial sense.) The company also promises iPhone-enhanced security for disputed payments by geotagging every sale made off-premises with the latitude and longitude of its location.

PayPal Here: No tiers here; PayPal will simply charge a 2.7-percent fee per swiped transaction. The company is attempting to entice merchants with access to PayPal’s existing customer base of more than 100 million people who already use the company for online financial transactions, along with the promise of round-the-clock tech support—and immediate access to funds in their PayPal account.

Square Register: This is the pioneering company in the market—one that says it is now processing $4 billion in payments annually. Like PayPal, it charges one rate: 2.75 percent. Its new Square Register app expands the company’s services beyond mere card-reading to all aspects of a retail sale, even offering cloud-based business analytics that a business owner can check remotely. The company promises next-day deposit of funds into a merchant’s bank account.

What those offerings have in common is that they’re aimed at the very smallest businesses. But iOS-based retail is expanding into mid-sized companies; Revel—targeting businesses with $500,000 in annual sales—recently introduced an iPad-based point-of-sale system that lets customers choose what they want to buy, then swipe their card to complete the sale. The system is in place at Twistee Treat, a Florida-based chain of ice cream franchises.

“We took on the iPad because they’re selling like hotcakes,” said Twistee Treat CEO Corey Balzer. “For us, because we’re a 30-year-old brand, it really updated our brand overnight. The more Apple does—obviously they’re doing pretty well—we’re piggybacking off of that.”

Industry observers say the market for mobile card readers is only about 10 percent as big as it could be. Despite Revel’s advancements, though, most companies expect to focus on small businesses for now.

“For the foreseeable future, it will be a lot of incremental enablements—we’ll be able to enable lots of businesses that don’t currently have credit card readers,” said Hill Ferguson, PayPal’s senior director of mobile. “We’re not looking to displace [the traditional credit card] infrastructure; we’re looking to enable the entrepreneur.”


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