If mobile-payment technology providers stub their toes with security, or if merchants deem a vendor’s mobile payments too complex, another company likely is working to resolve the problem.
Paythatway Enterprises Ltd. is among the vendors doing just that. The company says its system takes the complexities out of mobile payments by not limiting the service to a specific phone model or carrier’s special software or data plan. It also says its system is secure.
Meridian, Idaho-based Paythatway awaits patent approval for a key-chain-sized credit card reader that communicates standard credit or debit card information with any mobile phone supporting Bluetooth connectivity, the company announced Dec. 27.
By using the Bluetooth link, Paythatway reduces Payment Card Industry Security Standards liability for merchants using the device because no data are stored in the device or the phone, Paythatway founder and President Ryan Malloy tells PaymentsSource.
In addition, the Bluetooth link allows the Paythatway card-swipe device to work agnostically with literally thousands of phones, including older models, Malloy says.
“Not every consumer has, or even wants, the newest, the latest and the greatest in mobile-phone technology, so we wanted to offer merchants something that could be used on the smartphone as well as the most basic models,” Malloy notes.
Paythatway manufactured the mobile-payment devices for mass distribution in early September after a testing period during the summer. The company’s technology-development team validated the device’s use on all major cell-phone carriers and established phone-line connections with all bankcard-processing systems, a company press release stated.
When the card-swipe device receives patent approval, Paythatway intends to distribute it nationwide for $250 plus a $10 monthly fee and 10-cents per transaction, product distributor Joe Kroetch of Coeur d’Alene, Idaho-based Mobile Token Payments, tells PaymentsSource.
By comparison, Mountain View, Calif.-based Intuit Inc. offers a GoPayment application and card-reader for smartphones or tablet devices with no monthly transaction fees, but swiped transactions incur a fee 2.7% of the sale. A monthly payment option costs $12.95 per month, with a swiped-transaction rate of 1.7% of the sale
San Francisco-based Square Inc. initially had a 15-cent fee for each card-present transaction, but it dropped that fee early in 2011 in favor of merchants paying 2.75% of the sale for card-present Square transactions and 3.5% plus 15 cents for card-not-present transactions. Merchants pay no statement or payment-gateway fees for Square’s service, and the card reader is free (
Depending on the volume of future device sales and card transactions, Paythatway likely will adjust its pricing, too, Malloy says.
“We would like to get our retail price for the device down at some point, but the company doesn’t believe in giving it away because that signifies it has no value,” Malloy says. Plus, merchants using the device will save money on PCI compliance and scoping because no credit card data will be stored with the merchant, he adds.
With the Paythatway one-time setup system, when a merchant or sales clerk connects the card-swipe device and phone using the Bluetooth link, a Paythatway Token icon becomes a menu item on the phone that when chosen automatically calls Paythatway to register the pairing, the company website explains.
A salesclerk using the system starts a credit card transaction by pressing and releasing a button on the card-swipe device, which displays a green light to signify he can swipe a card through the reader.
After the clerk swipes the card, the token flashes a blue light to signal it is connecting to the phone through a secure Bluetooth channel. The phone automatically dials Paythatway, which receives encrypted information and transmits it to the acquiring bank.
The clerk responds to phone prompts to confirm the amount of sale and tip, ZIP code, and work order number. The clerk hears a cash-register “cha-ching” tone to indicate he completed the transaction successfully, according to the press release.
Paythatway may have manufactured a secure and easy-to-use device, but it must convince merchant acquirers the system is better than others already available, Adil Moussa, a senior analyst at Aite Group, a Boston-based consulting and research company, tells PaymentsSource.
Vendors have proposed many different devices, and companies such as Scottsdale, Ariz.-based Apriva LLC have worked on secure mobile-payment technology in the past, Moussa contends (
Still, Paythatway could find a comfortable niche with open-market businesses, service companies with delivery fleets, and pizza-delivery chains, Moussa suggests.
The company sells compatible receipt printers, but many test merchants are choosing to use hand-written receipts when using the device, according to a company press release.
A merchant’s only other responsibility is to provide the merchant-account information to Paythatway to establish the payment gateway, the company stated.
Moussa contends Paythatway will encounter the same obstacles other mobile-payment technology developers face.
“There really has to be an appetite for this amongst merchants,” he says. “At the end of the day, the questions are, who really needs it, and how do you compete with others and displace products already being used?”
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