The biggest trend in merchant acquiring this year is a concentration on developing and selling mobile card acceptance to micromerchants, a new report suggests.
No one knows specifically how many micromerchants support mobile payments, but the potential market of cab and limousine drivers, babysitters, landscapers, Girl Scouts, flea-market peddlers, and farm-stand operators totals about 16.5 million, says David Fish, senior analyst at Mercator Advisory Group Inc. and author of “The U.S. Merchant Acquiring Industry in 2011: Going Mobile,” released July 19.
“Penetration is still low,” he tells PaymentsSource, citing the vast number of possible users.
Still, software providers seem well aware of the vast market, Fish says, citing the 63 available downloadable applications that enable smartphones to accept card payments. But not many of those applications offer much to differentiate themselves from the competition, he adds.
Within the past 18 months, acquirers have been pursuing micromerchants, which traditionally have operated on a cash-only basis or have relied on “knuckle-buster” machines that manually capture card impressions, Fish says.
Independent sales organizations that sell electronic-payments acceptance to merchants might find themselves in an unfamiliar situation when seeking customers among categories they previously have not visited, Fish says. Venturing into new markets could require “evolution” on the part of ISOs, but they have a relatively new tool to aid them in the chase –social networking, he says.
In addition, the mobile apps cost much less than do countertop payment terminals, good news to merchants who would pay a lower price if they purchase an app instead of a terminal and to ISOs who would save purchase and inventory costs if they provide free terminals to merchants.
Most merchants who already have smartphones likely know how to download apps, bringing simplicity to the sales and setup processes, Fish says.
Though mobile payments are fairly new, the technology becomes subject to the same competitive pressures as any other product in the acquiring business, Fish said in a press release announcing the report.
“Competition for the general populace of potential card acceptors via smartphones could be quite bloody indeed,” he said, suggesting offering functions that go beyond payments could help tailor mobile to fit market segments.
Maynard, Mass.-based Mercator based the report on data from the last year, and Fish says he added analysis and commentary to expand upon the information.
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