Article

Mobile POS providers earn customers and merit badges

Players in the emerging mobile point-of-sale business are facing an increasingly competitive market.

March 6, 2011 by James Wester

In a recent announcement, Mountain View, Calif.-based Intuit Inc. said it is offering its GoPayment mobile credit card processing service to interested Girl Scout troops at a reduced rate. Troops will also receive a free card reader that attaches to more than 40 styles of smartphones, including devices using the iOS, Android and BlackBerry mobile operating systems. The Girl Scouts of North East Ohio is the first girl scout council to participate in the program.

"We're glad to put the latest mobile technology in the hands of America's future business leaders to help them increase cookie sales," said Chris Hylen, vice president and general manager of Intuit's Payment Solutions division.

The Intuit announcement is additional evidence that the emerging mobile point-of-sale (POS) business is heating up, and that in this battle even the smallest businesses (and businesspeople) count.

Introduced by Intuit two years ago, GoPayment was one of the first services on the market to allow small businesses to use smartphones as mobile POS terminals for accepting credit cards. Sharna Brocket, senior public relations manager for Intuit, said GoPayment was based on a simple idea: “One thing small businesses need: to get paid out of the office.” She said small businesses, especially what she called “personal businesses,” need the ability to get paid in the field where they actually interact with their customers.

Intuit obviously understands the small business market. According to Brocket, the company currently has 7 million small business customers. Intuit’s QuickBooks accounting software boasts more than 4 million small business clients. The company’s payment processing division processes more than $17 billion in transactions for 300,000 small business clients.

Intuit may need all the expertise it can muster to succeed. The mobile POS business is attracting a horde of competitors. Sage Payment Solutions announced a competitive product in February. Square, a start-up based in San Francisco, rolled out its product last year. VeriFone, a leading manufacturer of retail and restaurant POS terminals, recently announced it will be expanding its PAYWare Mobile Service into international markets.

The increase in competition has forced companies to drop their prices and fees to attract new customers.

In January Intuit announced it would offer new GoPayment customers free card readers as well as no monthly access fees. Since then, Brocket said, Intuit has seen a threefold increase in the number of customers signing up for the product on a daily basis. Due to the response, the offer, originally set to expire in mid-February, was extended indefinitely.

To keep pace, Square recently eliminated the fee it charges per transaction. Instead, customers now pay only a percentage based on the amount of the transaction. The strategy seems to be paying off. Though the product is only available on devices running the iOS mobile operating system at the moment, Square CEO and founder Jack Dorsey took to his Twitter account last Wednesday to announce the company is now processing more than $1 million per day.

Square has also benefitted from a spate of positive press thanks in large part to the profile of its founder. As the cofounder of Twitter, Dorsey is seen by many as something of a technical genius and part of the next generation of Silicon Valley leaders.

All that attention doesn’t bother Greg Hammermaster, president of Sage Payment Solutions. Hammermaster said Dorsey’s "celebrity prestige" has actually helped by drawing attention to what has been a niche market.

According to Hammermaster, the Sage mobile payment solution isn't an end in itself to the company. In fact, he said, Sage doesn't see their mobile payment solution as a profit center. He also said, "It's not a gadget. It's not about the device; it's that businesses are mobile."

"(Our product) is more industrial strength," said Hammermaster. The Sage solution is set apart from competitors with a lower price, better data security, a wider range of devices on which the product is compatible, and integration of the transaction data into other applications, he said. The Sage mobile payment product is a part of a more robust package of services for small and medium-sized businesses, he said.

The Sage mobile payment solution integrates with Sage Exchange, the company's payment platform. Sage Exchange can automatically push transaction data out to several of Sage's accounting, enterprise resource planning (ERP), and billing and time tracking systems. Additionally, Sage Exchange integrates with many third-party software packages.

Whether or not Girl Scout troops realize they're a part of a bigger story about the growth of the mobile POS market, for them it really comes down to cookies. For more than 80 years the Girl Scout Cookie Program has served as a major fundraising source for Girl Scout troops and councils nationwide, with an estimated $700 million raised annually through the effort.

It is yet to be seen whether accepting credit cards will increase the amount of funds raised by the Girl Scouts through cookie sales, but Scout leaders are optimistic that it will.

"We've lost out on sales in the past because many potential cookie customers did not carry cash," said Marianne Love, director of business services for the Girl Scouts of North East Ohio. "For the first time ever, we'll be able to say yes to credit cards and process payments quickly right on our phones."

And Intuit is looking forward to seeing the results, Hylen said:

"We're eager to see how sales will increase now that they take credit cards with GoPayment."

(photo credit: woodleywonderworks)