6 Mobile Payments Platforms for Merchants

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Square’s little square, white plug-in for iPhones and Android phones is becoming commonplace among business owners on the road or even on-site. But they’re not the only game in town, and with smartphone penetration at an all-time high—66% of consumers between the ages of 25 and 34 now own a smartphone device—analysts have been quick to predict the rise of mobile payments and the end of the wallet as we know it.

Only 4% of merchants currently accept mobile payments, according to a study by Javelin Strategy & Research, however 20% say they intend to adopt this technology within the next 12 months. Given that mobile payments are still in their infancy, and the landscape is still wide open, several players are vying for market dominance. It’s hard to say yet whether one will be a clear winner, or, as with cell phones and credit cards themselves, there will be a handful of leading options.

Here are six mobile payment platforms aimed directly at local merchants.

1. Google Wallet
Google Wallet is a dominant player, but its service is limited to Android smartphones and merchants who accept MasterCard PayPass. Its benefits include integration with marketing programs such as Google Offers. Merchants that adopt this one-tap payment technology can push their deals to customers searching for products in their local areas and boost participation in existing loyalty programs by integrating those programs into the Google system. Small businesses can get a Mobile Starter package—which includes a new contactless PIN pad, plus $100 in transaction processing fees—for free by signing up for the service. Merchants can expect to pay the same transaction fees with Google Wallet as they do when accepting traditional credit card payments.

2. Square
Square’s NFC application is compatible with an Android, iPhone, or iPad can use to start collecting payments through Visa, Mastercard, American Express, or Discover. Small businesses can accept credit card payments whether they’re tableside, outside, or at any location without a traditional register. Customers who’ve downloaded Square’s Card Case mobile app, meanwhile, can go without their wallets by making payments at participating retailers with the click of a button on their smartphone screens. Merchants that use the Square service are sent a free Card Reader when they sign up. Square charges a transaction fee of 2.75% per credit card swipe, with next-day payment deposits.

ISIS is a mobile wallet that consumers with ISIS-ready phones—available through Verizon, AT&T, and T-Mobile—can use to make payments, redeem offers, and earn loyalty points at participating local businesses starting in mid-2012. The system is compatible with Chase, Barclaycard, and Capital One cards, and available in selected markets like Austin and Salt Lake City. In addition to offering a simplified checkout process, ISIS gives merchants a way to engage with customers through integrated loyalty programs and special rewards and offers. ISIS has not disclosed the transaction costs for merchants.

4. LevelUp
Consumers in nine major cities can use LevelUp to make instant payments through their mobile phones at participating local establishments. The payments that LevelUp customers make are charged to their connected debit or credit cards, minus the discounts that merchants often tack on as an incentive for trying their establishments and returning for follow-up visits. Merchants that partner with LevelUp can get a payment dock, plus the mobile application, for free. The only cost associated with the program is a 2% flat processing fee, which businesses must pay for each transaction.

BOKU is a payment platform that consumers can use to pay with their smartphones, either online or at a retailer’s point-of-sale. These purchases are then charged to the shopper’s linked credit card or bank account. Merchants who accept mobile payment with BOKU get access to the platform’s suite of marketing tools, giving them a way to create deals and offer special discounts to BOKU users. As far as cost to the merchant is concerned, BOKU President Ron Hirson says the fees are comparable to what merchants pay when accepting payment with pre-paid credit cards.

6. Dwolla
People who aren’t keen on putting everyday purchases on their credit cards will appreciate Dwolla, a mobile payment system that users can load with money they’ve transferred from their banks and credit unions. Once money has been loaded into a Dwolla account, a consumer can spend it at any participating local merchant. Dwolla requires no hardware and no setup costs for merchants. Businesses that accept payments through the service pay a flat $0.25 fee for each transaction over $10; transactions under $10 are free.

Know of other platforms that businesses should use when accepting mobile payments? Leave a description in the comments.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.