Is the nature of m-POS competition changing?
[Gary Munro] I noted earlier this year that 2013 looked like being an important milestone in the establishment of mobile POS in the UK, enabling the micro-merchant community to accept card transactions, and that things were hotting up. Well today things just got hotter.
Stewart Roberts, UK Managing Director of iZettle, popped round to CHYP End this morning for a quick chat and to show off the new iZettle Chip & PIN reader which launched today in Europe. The new device is a fully secure and certified Miura chip and PIN reader, also used by Adyen and PayLeven in their recent mobile POS launches.
iZettle is not replacing the Chip & Signature device, rather they are providing both options for the merchant to decide which best suits their needs. The Chip & Signature reader is “free” (£20 upfront with rebates over time) while the Chip & PIN device is £49 + VAT. Transaction fees are the same for both at 2.75%. We expect that only merchants with very low transaction volumes will continue with Chip & Signature and that Chip & PIN will become the primary device.
The big questions though are whether the mobile POS acquiring (m-POS) market is big enough to support all of these entrants (and there are more to come, by the way) and what the competition will mean for existing acquirers.
There are currently around 1.3 million card acceptance devices in the UK market. Some players in the US say that they have bought their last traditional POS terminal, and in the future mobile variants will be the route forward. However the bulk of the existing market is not the target for m-POS, or at least not today. In the UK, the “micro merchant” and “new to card” acceptance space is anticipated to be around 1 million new merchants such as: photographers; market traders; home sellers; charities; plumbers; seasonal holiday lets; farm shops – farmers markets; basically the merchant and mobile merchant for whom the traditional POS device does not make sense.
So how does it all work and how will the merchant chose between iZettle; PayLeven; Adyen; Intuit and new players such as mPowa all looking to provide mobile POS card acceptance, and how will the merchant choose which service to go for?
To some extent the players are positioning themselves based on the services they provide, subdividing the market:
- Adyen are looking to provide a combined offer with m-POS complimenting e-commerce and traditional face to face payments, providing an enhanced purchasing experience in higher end retailers;
- Intuit are offering the potential of linking mobile POS solution to their Quickbooks software;
- mPowa want to provide infrastructure solutions to the major customers such as FNB & Portugal Telecom, with customers such as these targeting the micro merchant estate directly.
The micro merchant can therefore look for the m-POS provider who has the service which best meets their needs. Stewart said that customer service and the payment experience will decide who a merchant signs up to. So it is reasonable for iZettle to see the system and experience that they have behind them as they enter the chip and PIN space as a real advantage. They’ve worked hard on the customer experience (we used this last week, as we decided to use iZettle to accept payments at the London Barcampbank 6 unconference). The online portal is where a new merchant signs up for iZettle, and they reckon the whole onboarding process will take only three or four minutes (this was our experience) including 40 seconds for AML & KYC checks! No waiting for a week for approvals, the aim is to enable the merchant to take payments as soon as their reader arrives. The merchant can sign up as a business (enabling VAT functionality) or an individual private account. The interface is simple and functional, allowing the merchant to create product lists for photo driven menus, view various reports, add additional cashiers, view transactions, send duplicate receipts, most of the things a small merchant would want in a card payment system.
The iZettle app is available for both iOS and Android, though as Stewart admits the Apple version is more feature rich, with plans that the Android version will catch up. The reader connects to the smartphone by Bluetooth, and I was surprised how simple it was to get started. The iZettle system uses over-the-air provisioning to allow the merchant to use any phone/reader combination, ensuring that product lists are consistent.
For sales the merchant can enter amounts directly, select products from a list, offer discounts, accept cash or card and send receipts either by e-mail or to wireless printers. The receipts detail the transaction, show where it took place, what was purchased and for how much.
Existing acquirers who have yet to enter the micro merchant market must be concerned that these m-POS solutions may cannibalise the lower end of their merchant base, or indeed their traditional mobile POS estates. There are interesting times ahead in the low volume end of the market as there seems to be a shift in the nature of the competition. These new solutions offer simplicity, functionality and service as key to success, rather than the lowest price.
These are personal opinions and should not be misunderstood as representing the opinions of
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