Category Archives: square

Goodbye Visa, Hello Fingerprint Payments?

Last week’s news that a host of high profile investors have contributed a record $25m (£16.4m) seed funding for mobile payments startup Clinkle has certainly caused a stir in the industry.  

While everyone from banks, operators, retailers, payment providers, OEMs, and of course consumers seek to benefit from the innovation going on, could mobile payments end up being something of a mythical El Dorado city of gold? 

Traditional players are joining forces in some areas and appear to be thinking creatively, but do they have the agility to succeed? And what chance do startups have in taking a share of an industry which is set to be worth $235.4bn (£153.8bn) by the end of 2013? 

I spoke to two mobile payments specialists, Michael Nuciforo, futurist and former head of mobile at RBS and Australian bank ANZ, and Roy Vella, ex-PayPal and Visa Europe exec, about the current state of the market. Both now work as consultants advising major players in the mobile payments space so we asked them who they think ultimately wins in a crowded market like this. Does the market own the customer, or will consumer choice prevail?  

Truth or crap? 

While a lot of noise is being made from vendors selling ‘the next big thing’, both men urge caution. “We need to distinguish between the truth and the crap,” says Nuciforo. “When we look at what’s happening in the market, the first thing you have to understand is that a lot of the announcements that you see are purely that, they’re not necessarily fully functioning services.”  

Although consolidation may help, Vella doesn’t see this happening any time soon: “I think money’s going to get more fragmented not less. The idea that there’s a winner in mobile money is just PR.” And as operators, banks and payment providers continue to carve up their customers, Vella adds: “This ‘we’re going to own the customer and that’s going to be forever’ is ridiculous. That’s never going to happen again. It’s now as easy to move as a touch of the finger.”  

Initiatives from the biggest names in the payments industry have been slow to start or are yet to take hold but Nuciforo is betting on the banks, at least in developed markets: “Joint ventures like Weve really have to rely on coming together and trying to attack the market as a group because if they were to do that on their own, they would have no chance. But success really depends on regions and market sophistication. “In Europe, the UK, the US and parts of Australasia, I think the banks stand the strongest chance from the perspective that they have the opportunity to come together, which a lot of them still haven’t yet,” says Nuciforo. “Most importantly, payments are driven by the fact that your salary is paid into a bank account.” 

Vella takes a more critical view of these traditional players. “The banks and the operators are both trending towards commodity utilities. They’re just a central clearing house for data. The one who’s going to win is the one who provides the most convenience for the customer at that time for that particular transaction. “But it could be any brand. It could be Tesco. It could be Virgin. It could be Apple. People have brand affiliations that they like and if that brand offers them service and convenience and value, that’s what they’re going to use.” 

Middlemen will lose out 

He sees the traditional customer-merchant relationship coming back to the fore. “I think merchants and consumers are going to connect directly in as many cases as possible,” Vella says. “The losers are going to be the intermediaries like Visa and Mastercard who are trying to connect the dots between two individuals. That clearing system in the middle is not required anymore. If they’re not worrying, they ought to be.” 

In the US, the likes of Walmart, Target and Gap have come together as the Merchant Exchange to seize on the energy of mobile payments. Vella points to the potential of closed-loop merchant systems: “The most successful mobile money implementation in the developed world today is run by a coffee shop. Starbucks is holding $1.5bn in balance. Coffee that’s been purchased but not even drunk yet.  “What we all forget because we weren’t born then is that payments used to be run by the merchant. In the 40’s, 50’s and 60’s, they outsourced payments to Visa and Mastercard and now they’re going to insource them back.” 

He sees this as a key time for shoppers to reassert themselves. “Consumers are definitely flexing their power in terms of transparency and understanding the market. They are going into retail stores now and bringing their phone with them and they know exactly the price of the item in front of them, globally, in every currency and they know how well it performs. I know what I know, and what everyone else I know knows, and what everyone they know knows,” he says. 

The future is Square

 So what of the weekly announcements from mobile money startups? Nuciforo is sceptical. “It is difficult to see a big player emerge though there is a lot of interesting tech coming out. Eventually I see a huge amalgamation of all these startups; some of them will die off, some of them will be bought.” Vella is more keen. “The future is Square [Wallet]. I don’t touch anything. I walk in and I walk out. I don’t want to touch my phone, I don’t want to touch my wallet. That’s the world we’re going to live in.” 

Both point to biometric as the next battleground. In Nuciforo’s native Australia, where the futurist usually looks for consumer trends yet to hit the UK, his former employer ANZ bank is already investing a huge amount in fingerprint cash machine. He says the next step for this would be fingerprint payments. 

NFC, a key element of the Weve Wallet to launch mid-2014 is a pet hate of Vella’s. “One, it’s not fast and two, nobody cares,” he said. “The difference between swiping, chipping and pinning and almost touching a reader – nobody cares. That’s not important. No value has been added. “Eventually maybe it’ll be biometric – the whole Minority Report thing – we are not far from that.”

Written for Mobile Marketing Magazine and first published here:

Mission mPOSsible – Decoding Mobile Card Readers

Given the number of announcements about mPOS solutions this year alone, you’d be forgiven for thinking that every market trader or corner shop owner is just a tap away from taking card payments on their phone. But the majority of some 4.8m small companies in the UK are yet to accept any kind of card payments, let alone mobile-enabled ones. 

According to a survey by Intuit of 1,000 micro-businesses, which have fewer than 10 employees, only 19 per cent currently accept card payments. But, while merchants are still getting their act together, many consumers are increasingly cashless. A study of British shoppers by Santander UK and iZettle revealed that 39 per cent avoid businesses that don’t accept card payments or require a minimum payment amount. Independent retailers, pubs and bars, market stalls, taxis, along with food and drink stands at events were all identified as potential losers. 

Here, we take a look at a range of newly launched and more established mPOS providers to reveal just how competitive the market now is. An industry-standard charge of 2.75 per cent per transaction seems to have been reached to make the offer simple for merchants. Free Apple and iOS app systems dominate, but what does this mean for emerging markets where smartphones haven’t taken hold?  

Many of the solutions don’t have a large customer base, with some reluctant to reveal their figures. Plus, some of the mPOS supporters detailed below reveal a tech proxy war in the payments space between more familiar companies, and even between different innovation hubs around the world.  But what if this doesn’t even take off? Will mPOS be superseded by contactless or peer-to-business payments before you can say swipe or sign?   

Intuit launched in the UK in March and is the only one of our mobile payments systems currently operating in both the US and UK, as well as Canada. It offers swipe across the pond or Chip & PIN systems to UK traders, which connect via Bluetooth to an iOS or Android app. Established in 1983, giving it a fair head start, the company also offers a range of online book-keeping services to its clients.  It was recently caught out lobbying the US government to the tune of $11.5m – more than Apple or Amazon – to ensure its tax solutions don’t get wiped out by free online accounting. 

Cost of reader: £49 or free in US (was £99) 
Cost of transactions: 2.75% on all transactions / 3.75% on manual / or a monthly plan of $13 a month (US-only) Supporters: Partners with Verizon in the US and now on sale in Staples online and in UK stores  

Sweden’s iZettle got off to a bumpy start when it launched in November 2012. Although it had a sales partnership with EE in the UK, the free headphone jack-connected swipe device left users unable to accept Visa payments. Nonetheless, the company says it had 100,000 customers by the end of the year. The Chip & PIN reader, which works via Bluetooth and an Android or iOS app, launched in February. It currently operates in the UK, Spain, Germany, Sweden, Denmark, Norway, Finland and now Mexico. 

Cost of reader: Was £49 now £99 plus VAT but offering £50 cashback to Santander Business Banking customers in Spain and the UK 
Cost of transactions: 2.75% per transaction but if you’re not using the card reader, the fee is £0.10 + 3.5% per transaction 
Supporters: Santander invested €5m in June this year   

Judo launched in the UK in May and operates here on the USP that sellers and merchants do not need a smartphone or a card reader to make or accept a mobile payment. It has 2,000 small business customers at present and says it will go global if its clients require it. There are a range of transaction limits outlined by the company, but these can be waived under certain circumstances. 

Cost of reader: No device but £50 to set up account 
Cost of transactions: 2.9% + 29p  Supporters: Privately-owned    

Jusp (short for Just Pay) just received $6m (£3.9m) in Series A funding to develop its European Chip & PIN solution that connects via the headphone jack a la Square. The Italian company was founded by two 25-year-olds in November 2011 and is heading for a Q3 2013 launch. It offers the lowest transaction fee of any solution out there – but only just!

Cost of reader: €39 (£33) 
Cost of transactions: 2.7% Supporters: Italian VCs   

The UK’s Monitise launched its mPOS white-labelling service in Europe, Canada and parts of Asia in May this year. The company has a variety of live models that are chosen by its customers and the cost of each deployment depends on a variety of factors, not least of which is the size of market and type of solution. Monitise recently partnered with Blackberry to launch the BBM Money peer-to-peer  payment service in Indonesia. O2 is currently offering a Monitise mPOS for £20 (plus VAT and 2.75 per cent per transaction) to Android and BlackBerry users. 

Fees: Monitise does not set the transactional or devices fees – its customers build their own models 
Supporters: Visa   

payleven is on offer in Brazil, a fast-growth smartphone market, along with the UK, Germany, the Netherlands, Italy and Poland. It would not disclose its usage figures, but went on sale in February 2013 with its Chip & PIN device that works via Bluetooth with an Android or iOS app. The German company launched in March last year and like Square in the US, has received the stamp of approval from Apple in the UK, where it is now on sale in retail stores.  

Cost of reader: £99 (was £49) 
Cost of transactions: 2.75% plus £20 credit for payments Supporters: Apple    

PayPal Here  
Although it will not disclose any usage figures, PayPal is among the legacy figures in this line up, and has accumulated 110m active online payments accounts since it launched in 1998. The free swipe/manual/Chip & PIN headphone jack reader and app system, PayPal Here, is ‘on its way’ to the UK this summer. It is already in use in the US, Canada, Australia, Japan and Hong Kong. The company has been accused in recent times of being slow and bureaucratic but it does have the most visibility among consumers. 

Cost of reader: Free reader 
Cost of transactions: 2.75% when you swipe a card / 3.5% plus $0.15 per transaction when you type in a card number (3.6% in Japan plus 40 Yen, increasing to 5 per cent for use of Here) 
Supporters: Owned by Ebay. And the ‘PayPal Mafia’…   

Square was founded by Twitter’s Jack Dorsey in 2009 and was first-to-market with its headphone jack and app solution, which launched first in the US. It is now on offer in Canada and Japan but they haven’t (yet) reconfigured the payments platform for use in the EU. Square currently has 4m users and has a variety of loyalty offers, including the Square Wallet and gift cards. Square recently announced that it would not allow its product to be used by gun sellers. Which is nice. Both Square and PayPal are going head-to-head with operator NTT Docomo in Japan. 

Cost of reader: Free swipe reader 
Cost of transactions: Pay 2.75% per swipe for all major credit cards (3.25% in Japan) or a flat monthly $275  Supporters: Twitter, used in Starbucks and sold in Apple’s US stores   

SumUp is currently on offer in the most countries around the world: the UK, Belgium, France, Portugal, Russia, Ireland, Germany, Austria, Italy, Spain and the Netherlands. It would not comment on usage figures but launched in August 2012, giving it a fair head start over other European providers. It is currently only a chip and signature solution that attaches to the headphone jack, but a PIN reader is on the way. 

Cost of reader: Free 
Cost of transactions: 2.75% Supporters: Klaus Hommels (early Skype, Facebook), Groupon and AmEx