According to new findings from the Local Commerce Monitor, SMBs are continuing to embrace mobile platforms, with 40% of SMBs now accepting payments with mobile credit card readers (e.g. Square and PayPal Here). This number is set to rise considerably with another 16% planning to use them in the next 12 months.
How do they work?
Mobile payment services allow businesses of any size to accept credit cards. Typically the credit card reader or dongle is given away free to the business. A business then downloads the associated app onto their smartphone or tablet, links up their bank account, attaches the card reader to their device and then they can start taking payments.
The main benefits over traditional payment processing are:
- No upfront set up costs
- Straightforward transaction rates, usually around 2.75%
- Flat transaction fees regardless of the card type a customer uses.
The emergence of these mobile payment services are threatening to disrupt the payment processing industry quicker than originally thought. Square one of the biggest players in the US market has announced they are processing $15 billion in transactions on an annual basis, or $41 million in payment volume per day (excluding their Starbucks partnership). With the launch of the new Square Stand for an iPad, which will act as a full-fledged register allowing merchants to process payments faster, this volume is likely to grow rapidly.
The “Square of Europe”, iZettle, recently had an investment from Banco Santander, Europes largest bank and have recently changed their pricing structure so their transaction fee can be as low as 1.5% depending on the monthly sales volume of the business. This change is considerably less than the 2.75% transaction fee offered by their rivals SumUp and Payleven.
With Groupon and American Express recently investing in SumUp, Intuit Pay launching in the UK before several of its competitors and PayPal Here planning to follow into Europe soon, it’s likely that the number of small businesses worldwide using mobile payment services is set to grow even further.
Are you using a mobile credit card reader? Tell us what you think of them by commenting below.