A growing number of large and small payment technology companies are rolling out tools that can turn mobile phones into mobile card acceptance devices.
Some of the biggest issuers and card networks have been testing technology that can let consumers use their phones to make card payments, but the rollout has been stymied by the conflicting needs of banks, wireless carriers and phone makers. However, observers said that the business case for adding acceptance software to phones is much easier to make, and that the applications could enable millions of the nation's smallest businesses to begin taking cards.
Intuit Inc. introduced its GoPayment service last week, becoming at least the fourth company this year, and the biggest to date, to offer a mobile acceptance tool.
Chuck Harris, the general manager of Intuit's payment solutions division, said the Mountain View, Calif., company is aiming at plumbers, electricians, exterminators and other people who typically do their jobs at customers' homes and businesses. "There are a lot of small businesses in that customer base. We saw an opportunity to solve a problem here: people getting paid."
Intuit's service works on any mobile handset with Internet access, though the company plans to work with Sprint Nextel Corp. to market the offering to field service workers, especially those who use the Nextel Direct Connect network that is popular with companies that have numerous workers on the road who are in frequent contact with a dispatcher.
Intuit became the second vendor in three weeks to move into mobile card acceptance. The San Francisco payment technology vendor BServ Inc. said this month that it had bought the assets of the Houston hardware developer Commerciant LP, largely to offer Commerciant's Mobilescape portable payment device, which is not a phone but uses the same cellular networks to transmit card data.
In addition, at least two companies have introduced applications designed for Apple Inc.'s iPhone this year.
The relatively rapid emergence of mobile acceptance technology is in contrast to the long-running efforts of banks and card networks that have been testing the use of mobile phones as payment devices since at least 2005, using contactless near-field communications chips that are integrated into the handset. Those trials continue, but experts say wide-scale commercial deployment of the devices remain months, or possibly years, away.
Bruce Cundiff, the director of payment research and consulting at Javelin Strategy and Research of Pleasanton, Calif., said adding near-field capabilities to phones requires the creation of a complicated ecosystem for handset manufacturers, mobile network operators and financial companies, and the various players have yet to develop a business model that satisfies all three players.
However, turning a mobile phone into a portable terminal fits easily into the existing business model, he said; entering the payment data into a phone and routing it across a wireless network to a card network expands a merchant's capabilities, but it does not require any major changes to the current system.
"It's a lot less convoluted on the acquiring side. It's easy to build the business case," Cundiff said. "You can make the immediate business case as the merchant to invest in this technology."
Card acceptance systems work over the data networks that are increasingly popular on mobile handsets, he said. "It's covered. You're there. It's going to help you immediately."
Richard K. Crone, the founder of Crone Consulting LLC in San Carlos, Calif., said the blossoming of mobile card acceptance could cause many more of the nation's 20 million small businesses to accept cards for payment.
"It opens up a whole new world for merchant processing." he said.
Randy Palermo, a Tustin, Calif., entrepreneur who developed one of the first card acceptance applications for the iPhone, said the appeal of mobile acceptance is instantly evident to entrepreneurs.
"This is all they need — an iPhone that they already have, or they can go out and get one — and they can accept payments on the spot," Palermo said.
He introduced his ProcessAway tool in January; users enter a customer's card number into the phone, and the payment is processed under the "card not present" rules for online purchases.
Palermo, who does business as Rapadev LLC, said he has deals with several large merchant processors and independent sales organizations that plan to market his technology under their own brands. He said he did not have permission to identify those companies.
The merchant processors and ISOs are asking for similar applications for other devices, and Palermo said he is planning to replicate the ProcessAway application for Google Inc.'s Android mobile operating system, Windows Mobile and the BlackBerry.
"Here the iPhone is, and these other devices, full-fledged computers that can interface with other applications," Palermo said. "You can do all kinds of things you could never do with old-school wireless POS systems."
As an example, he said, he wants to use the geo-positioning systems in the iPhone and other handsets to let mobile merchants define areas where transactions can be authorized. If the merchant's account is hacked, transactions could be excluded if they originate outside the authorized zone, he said.
Apple has even promoted mobile acceptance capabilities for the iPhone in some of its advertising, Palermo said, though not with his application.
"It really exposed the idea to a lot of people," he said. "We started getting a lot of calls after that, not just from the public but from other processors."
In February the Portland, Maine, merchant processor PowerPay LLC announced the availability of an iPhone application it is aiming at independent contractors, small businesses and start-ups.
Though these small tech vendors have popularized the concept, Cundiff said Intuit's entry into the market brings additional marketing clout to the fledgling business.
"If you're typing your card number into an iPhone, you're wondering, 'Is this really legit?' " he said. Intuit's service "is a bona fide solution that is going to seem much more legitimate to the consumer."
Harris said that even though Intuit GoPayment works on any Web-enabled device, workers with some Nextel push-to-talk handsets can download an application that connects the phone to a wireless card reader through a Bluetooth connection.
The reader — a belt-pouch size device with receipt printer that costs $220 or a handheld unit that costs $145 — also works with the same handsets on other carriers' networks, and Harris said Intuit plans to make its application compatible with additional devices in the future.