Notes of Note from John F. Ince

The ranks of companies offering mobile payment solutions targeted at small businesses is growing, with Intuit GoPayment and Sage Mobile Payments joining Square and others in offering simple devices or services that enable businesses to accept payments from customers through a mobile phone. These are sure to be viewed with interest by small business owners such as physical therapists who don’t want to have to buy a merchant terminal or cash register, nor pay merchant card processing fees. The SMB Group, a research firm focused on the small and medium size business market, is conducting a study of SMB payment behavior; preliminary data shows that 3% of SMBs accept mobile payments today and this number will increase to 7% in the next 12 months, and 16% by the end of 2012.

But while these alternative providers market themselves as being easier and less expensive to use than the traditional merchant terminal and card network model, many of them do use the card networks and their transaction costs are high when compared with the post-Dodd-Frank debit card transaction, which if the Fed’s current proposal goes through will have a transaction fee cap of 12 cents per transaction. Some seem higher than the typical credit card processing fee, which is around 1.79%.

Square, whose one-inch-square card swipe device attaches to an iPhone, iPad, or Android device, charges 2.75% plus 15 cents for each swiped transaction; typed-in transactions cost slightly more.

Sage Mobile Payments, which launched yesterday, offers a credit card reader that plugs into the audio jack of a smartphone. The company plans to charge customers a set-up fee and then a monthly fee starting at $10.95, but no transaction fees.

Intuit’s GoPayment, which works with iPhone, iPad, iPod Touch and BlackBerry devices and will be one of the first mobile payment apps available on Android 3.0-based tablets, provides a free card reader but charges 15 cents per transaction along with 2.7% per swiped transaction or 3.7% per keyed transaction for low volumes;

via Can Square, Intuit and Other Mobile Payment Providers Compete With A 12-Cent Debit Card Transaction? – Bank Systems & Technology.

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Comments on: "Can Square, Intuit and Other Mobile Payment Providers Compete With A 12-Cent Debit Card Transaction? – Bank Systems & Technology" (1)

  1. Thanks for the great post mentioning Sage Mobile Payments. I need to correct something, however. We are not offering Sage Mobile Payments with NO transaction fees. Rather, we are offering the product with no incremental mobile processing/transaction fees, meaning there are NO ADDITIONAL processing or transaction fees on top of the NORMAL processing fees associated with credit and debit card processing. Some vendors are charging regular transaction fees, PLUS additional mobile transaction fees, for their mobile payments products. We are only charging merchants whatever they would normally pay to process a regular credit card transaction; there is no mark-up simply because the merchant is using a mobile phone. FYI: The set-up fee is as low as $35 and the monthly fee as low as $10.95, depending on the contract option chosen by the customer.

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