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The mobile payment industry is constantly evolving and extremely complex.
NFC gains a lot of attention largely thanks to the fact that Visa has thrown its weight behind the technology. However, as yet, it has failed to take off because access to NFC enabled devices is limited and consumers are still largely sceptical.
In the short-term, it seems likely that mobile card readers will prove to be more popular with merchants and consumers.
The reason being that, unlike contactless payments, they don’t require consumers to learn a new behaviour. Instead they simply use smartphones to process transactions in place of a traditional card reader.
So with that in mind, here are four companies hoping to take a share of the mobile payment industry.
Backed by Twitter’s Jack Dorsey, Square’s mobile card reader work on iPad, iPhone and Android.
It has proved popular with US merchants, and even gained the President’s seal of approval when the Obama re-election campaign began using it to take mobile donations in January.
Square is already used by more than 1m merchants and processes $4bn in transactions each year.
The app and card reader are free, and there are no monthly fees or setup costs. Instead it just charges 2.75% per transaction for Visa, MasterCard, Discover and AmEx, while manually entered cards cost 3.5% plus 15 cents.
Payments taken during business hours are usually available in the merchant’s bank account the next business day. However, Square is currently only available in the US as it “cannot officially support banks, cards or merchants” internationally.
This could be to do with the fact that the card reader only recently began encrypting customer data.
Launched in the UK earlier this month, iZettle’s card reader is similar to Square in that it allows merchants to take card payments using an iPad or iPhone.
However, while Square’s is a swipeable card reader, iZettle uses chip and signature. After gaining 50,000 users in the Nordic market in nine months, the company is currently distributing 3,000 card readers for its UK beta phase.
There are no start up fees or monthly charges and the app and card reader are free. iZettle only charges transaction fees: 2.75% for MasterCard and Diner’s Club, or 2.95% for American Express.
It has gained a valuable head start on its competitors by being the first to launch in Europe – iZettle's founders say there are currently 20m companies in the region that only accept cash or invoices.
So it could be a very lucrative market if mobile card readers take off.
Another ‘soon to be launched’ product, PayPal Here has the benefit of a recognised brand name behind it.
The Android and iOS app is currently being tested in the US, Canada, Hong Kong and Australia, with the UK and other European countries ‘coming soon.’
As with the other examples, the card reader and app are both free but it charges 2.7% per transaction. It accepts Visa, MasterCard and Amex, but gets one over on the competition by also processing payments through PayPal and cheques.
You can even use it to raise invoices and track cash payments. One sticking point is the fact that all payments go into a PayPal account, which then takes three days to be transferred into a bank account.
Hardly a major issue, but iZettle and Square both transfer the funds overnight.
Sage Pay Mobile
Information about Sage Pay’s new mobile payment solution is still slightly vague as it’s currently in a closed test period, but it sounds like it could be more acceptable to the UK market than Square or iZettle.
Firstly, rather than using a card reader that plugs into the phone Sage Pay Mobile uses a traditional chip and PIN reader that connects to a smartphone using Bluetooth.
While that is less convenient to carry around than a small card reader, at least it is something consumers will be used to seeing.
Furthermore, it uses chip and PIN whereas iZettle and Square both use signature confirmation.
Sage Pay Mobile works on iPhone, iPad and Blackberry, and can process all major debit and credit cards
Unfortunately the technology is not currently available to the public, and nor do we have any pricing information available.
However Sage Pay said it expects to launch the product later this year.