Companies offering smartphone-enabled point-of-sale hardware and software applications are unlikely to capture business from providers of traditional wireless-payment terminals. The more likely outcome is that the two types of wireless devices will compliment each other, with the smartphone-enabled card acceptance attracting small mobile merchants that have avoided purchasing wireless terminals because of the cost, observers say.
Smartphone-based payment applications and devices are enabling a “much wider group of merchants, typically referred to as micro merchants, to accept electronic payments,” says Paul Rasori, senior vice president of marketing at VeriFone Holdings Inc., a San Jose, Calif.-based terminal maker. “In the past, those merchants couldn’t justify paying for electronic payments. By enabling the cell-phone technology they are carrying with them anyway (to accept card payments), the cost of entry into the payment system is much less costly for them.”
Before smartphone-enabled payment card acceptance emerged in the market, merchants’ only alternative was to buy a dedicated wireless-payment device, which typically includes a higher upfront cost, says Rasori.
A merchant may pay between $600 and $800, depending on the reseller, for a traditional wireless terminal, says Rasori. In addition, wireless devices typically need their own network connections, which may cost an additional $15 to $20 each month, he notes.
In contrast, VeriFone’s PayWare Mobile service includes a free application merchants can download from Apple Inc.’s online application store and a card reader available at Apple stores for $149. The reader is free for many merchants if they sign a long-term contract, according to VeriFone.
VeriFone’s suggested pricing plan is a $15 monthly gateway fee and a one-time $49 sign-up fee for merchants with existing accounts. Merchants also pay VeriFone 17 cents per PayWare Mobile transaction. Resellers, including acquirers, set their own rates, VeriFone says.
A market exists for both types of wireless products, agrees Scott Holt, senior vice president of business development for ExaDigm Inc., a Santa Ana, Calif.-based terminal maker.
