Long satisfied with offering merchants a purpose-built wireless point-of-sale terminal, Matt Freedman, chief operating officer at Total Merchant Services Inc., realized last year his independent sales organization needed to offer more to meet the needs of a broader mobile-merchant audience.
So on Feb. 10, the Basalt, Colo.-based ISO announced it has added Roam Data Inc.’s RoamPay mobile phone-based POS service, which works on a variety of mobile phones, including Research In Motion Ltd.’s BlackBerry Bold 9000 and Motorola Mobility Inc.’s Droid X, and is less costly than a purpose-built wireless payment terminal.
Merchants with only a RoamPay account from Total Merchant Services pay 1.69% of the sale plus 25 cents for a swiped transaction with cards bearing the brand marks of Visa Inc., MasterCard Worldwide or Discover Financial Services. The ISO does not include American Express Co. transactions because AmEx does not allow third parties to set its transaction rates.
Merchants also pay a $10 monthly fee for access to the Total Merchant Services payment gateway, which routes transactions to the appropriate processors for authorization, Freedman says. Merchants that add RoamPay to a Total Merchant Services account pay the rates included in their existing contract plus a $5 monthly gateway fee, he says. All merchants receive one free RoamPay card reader.
Freedman views RoamPay as an adjunct to the VeriFone Nurit 8000 wireless POS terminal his ISO has sold for years.
“With the Nurit 8000, it’s an expensive terminal and right for certain businesses,” where the transaction volume warrants the expense, Freedman tells PaymentsSource. Prices for Nurit 8000 terminals online range from $590 to $827.
Nurit 8000 sales are not as robust as Freedman would like, but the price for the device and accompanying merchant account has to be set high enough to ensure a profit margin, he says.
“We needed another wireless POS terminal with a lower price point,” Freedman says.
A conversation last year with George Wallner, co-founder of Hypercom Corp., during a business trip pointed Freedman to Boston-based Roam Data, he says.
To a merchant’s advantage, they may use RoamPay with a variety of phones, and the ISO has set a low price point for the card reader, which Total Merchant Services sells for $19.95, Freedman says.
Offering RoamPay’s inexpensive hardware and eliminating the wireless-data plan that some competitors require means Total Merchant Services can charge a lower price for the RoamPay mobile POS service, he says.
“We don’t have to make a lot of money from the merchant,” Freedman says. “That opens it up to a lot of people.”
Total Merchant Services is taking a slightly different approach with RoamPay than Square Inc. or Intuit Inc. are taking with their mobile POS products, Freedman says.
“Square is trying to set up as many people as possible, and Intuit has jumped on that bandwagon as well,” he says. “The problem is, you could set up 100,000 merchants and only 5,000 process in a given month. They’re basically going after the guy that holds a garage sale. A real business wants competitive rates and fees. We’re not going after the general public.”
For Total Merchant Services sales agents, RoamPay’s benefits are in its ability to entice prospective merchants to talk to agents and to serve as an add-on to existing merchant accounts, Freedman says.
Sales agents initially believe that as a standalone service, a RoamPay Total Merchant Services account will not make them much money, Freedman says. “They have to realizes that half the time they will add this to an existing account,” he notes. “It will give merchants one extra reason to switch to us.”
Given the potential disruptiveness of mobile POS services from Square, Intuit and other ISOs, such as Sage Payment Solutions Inc. (
Like Intuit, Sage is targeting larger businesses that possibly have large delivery fleets and field sales personnel, Fish says.
Many ISOs are adopting emerging mobile-POS services as “defensive” measures, Fish says. “If they don’t have a competitive offering, they could lose merchants to competitors that are providing these kinds of smartphone add-ons,” Fish tells PaymentsSource. “It’s a good strategy for the entrenched ISO player.”
Roam Data has more than 200 resellers, which do not include sub-ISOs or sales agents, a Roam Data spokesperson says. That is more than five times the 35 resellers Roam Data had last April (
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