Local Payments for Local Merchants

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Mobile payments platforms are quickly emerging as a viable solution for small businesses seeking to conduct transactions without paying the high fees typically associated with a traditional merchant terminal.

One of the star players in this space is Square which has been used by a variety of individuals and businesses, from charities to taxis to food trucks, political campaigns and merchants in farmers markets (just to name a few). This type of service is especially good for any business that typically transacts in cash but would like to accept credits cards without paying huge fees.

As reported a last month, Square is now processing $5 billion in annual payments (or around $416 million in payments per month), which is up from $4 billion in annual payments in March. And payment volume is up 25 percent over the past month. The company also just started making funds available in merchants’ bank accounts the next business morning (for any sales made before 5:00 pm), while other merchant processors can take 2 to 5 business days to get merchants their money.

If you are a T-Mobile customer it’s even easier as they have become the first carrier to offer Square credit card readers to their retail business customers.. Under the company’s new campaign, stores equipped with T-Mobile smartphones.

And yet another sign that the solution is working, just this week iPad electronic health record (EHR) platform provider drchrono announced the integration of Square to its platform, providing a full mobile practice management solution for doctors.  This is ideal for those working on a temporary, freelance basis in medical facilities, and medical professionals who make a lot of house calls.

With Square yet to reveal when or where it might offer its mobile payment service outside of the US, we need to elsewhere to fill the gap in other markets. Sweden’s iZettle, which often gets compared to Square, is now doing just that.  They are by far the dominant player in Europe.  While Square caters to the U.S. market with a swipe-card reader, iZettle providers a chip/pin typer reader, which is the stardard in Europe.

The iZettle service works similar to Square, in that a merchant plugs a card-reading dongle into an iOS device to process a card payment using an app downloaded to the device. Instead of reading the magnetic strip on the back of the card, iZettle reads the chip — these are now near-ubiquitous in Europe and tend to be more secure. Like other card payment services, you sign on the device screen to complete a payment, and the funds are deposited in a merchant account the next day.

Another new entrant in the space is payments veteran PayPal. The company’s PayPal Here card reader and app is already making  waves in the U.S. and was launched simultaneously in several international markets, including Hong Kong, Australia and Canada.

PayPal Here is essentially a free thumb-sized card reader and app from PayPal that turns iPhones into a secure mobile payment system, allowing any business or individual to accept Visa, MasterCard and American Express cards, as well as PayPal payments on smartphones, anywhere, anytime.

The consumer app also allows you to check-in (ala Foursquare) with a participating merchant close by, making mobile-to-mobile PayPal payments possible in person.

Aside from the consumer convenience, the attraction among merchants is the flat 2.7% transaction fee (compared to Square’s 2.75% in the U.S.), with no annual, monthly or any other sort of fees.

Bottom line is that any local merchant that seeking to reduce credit card processing fees, or that historically only deals in cash and could benefit from that added ability to accept credit cards should consider these solutions.

Asif R. Khan is a veteran tech start-up, business development and marketing entrepreneur currently serving the community as founder and president of the Location Based Marketing Association (The LBMA). Weekly podcaster at This Week In Location Based Marketing every Monday. Can be found at @AsifRKhan @TheLBMA on Twitter.