The PayPal Here card reader and app
If 2012 was the year contactless payments finally crawled vaguely into the mainstream, 2013 is shaping up to be the year when it gets much easier for small companies to accept card payments.
There are a whole slew of competing products emerging, all of which enable you to take card payments with your smart phone. They include:
With so many companies entering the market, the next few months are likely to see aggressive competition. If you are looking to start taking card payments, you should be in a good position to get a decent deal.
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Most of these new mobile payment services function in the same basic way. When you sign up you get a card reader which connects to your smart phone. You also get an app which you must install onto your mobile.
Together your phone, the app and the card reader do the same job as the traditional card terminals currently used by retailers.
When someone wants to pay you, you open the app, enter the payment amount and process their card through the card reader. Some services use chip and PIN. but others only offer verification via signature, which is less secure. Over time, it seems likely that chip and PIN will become the standard method of taking payment.
What all these mobile payment services have in common is that they promise to simplify the business of accepting credit and debit cards.
At present, most companies need a merchant account to accept cards. Getting one can be time-consuming and expensive.
Typically, you pay a one-off set up fee, plus a commission of 1 - 3% on each payment. There's also often a monthly fee for the account itself, plus a charge for the hire of a card terminal - all wrapped up in a contract of 12 months or more.
In comparison, most of these new services charge up to 3% commission, plus a one-off fee (£50 - £100) for the card reader. With no minimum contract, they'll be attractive to companies who want to test the water or need to take card payments less often.
The unanswered question - so far - is how the banks and other companies that traditionally provide card processing services will respond to the increased competition. Will it rouse them to slash their costs and increase the flexibility of their own services?
We'll be keeping a close eye on this market over the next few months to see exactly how things shape up. Once a few more services are publicly available, we'll take a closer look at the differences between them.
In the meantime, if you've had any experience using your smart phone to take card payments then leave a comment to let us know how things have gone.
Small retailers have long known that if you want to be able to accept credit cards, you need to be good at jumping through hoops. Applying for and getting set up with a merchant account can be a lengthy process.
Things could be changing though, if a company called iZettle has its way. This Swedish firm is currently trialling a UK service that enables you to process credit card payments through your mobile phone.
When you sign up to iZettle, you get a card reader that attaches to your iPhone or iPad (see image - it's not available for other types of mobile at the moment) and an app that runs on your phone. Together, these turn your phone into a credit card terminal.
You open the app, tap in the amount to be paid, push your customer's card into the card reader, then pass the handset to them to sign on the screen. iZettle claims to work wherever you are, as long as there's an internet connection over which it can authorise the card.
The costs look reasonable too - there's a commission of about 3% on each payment, there aren't any subscription fees, and even the card reader is free.
You could use iZettle wherever you want. It would be useful for retailers, restaurants and bars, but because it runs on your mobile phone it also appears to be good for people who work on the move - like taxi drivers - or for use at events like trade shows.
Before you get too excited, iZettle has some disadvantages. It currently works only with MasterCard, American Express and Diners Club cards, leaving a pretty big Visa shaped hole in things.
It also seems to rely on a customer signature rather than using chip and PIN to process payments. Given the publicity-heavy switch to chip and PIN in 2005, it might unnerve your customers to find themselves having to sign again.
Despite these limitations, iZettle could be an early warning of what's on the horizon.
Our sister site Marketing Donut mentioned US company Square back in 2009. Since then, this similar service has grown to process $4bn worth of payments a year. PayPal is also introducing a mobile card payment service in the US.
Closer to home, mPowa and SysPay are both available or coming soon in the UK. And expect to see other companies announce similar services in the next few months.
Even if you already have a merchant account, these new players could shake up the market, potentially driving down costs and forcing established competitors to up their games. Good news, surely?