The MPOS' New Clothes

Mobile point of sale providers claim to serve the merchants that are too small for card acceptance: the gardeners, the babysitters, the flea market sellers. But this image is quickly fading as vendors pursue larger merchants, causing the upstart mPOS players to increasingly resemble the incumbents.

At first, it seemed like everyone was racing to match the simplicity of the original Square reader, and the biggest differentiator was shapes (the PayPal Triangle, the Roam Semicircle, the VeriFone Apostrophe). But as the market got more crowded, vendors sought other ways to set themselves apart.

The competition added complexity and potential cost, making these products a better fit for brick-and-mortar stores than micromerchants.

Throughout it all, Square has maintained its small plug-in card reader as a free option for the smallest business owners even as it introduced pricier versions such as the $99 Square Stand and the short-lived $299 Business in a Box. But even this free option may eventually go away; Square has indicated it will charge for the recently unveiled chip-and-signature version of its card reader, and with EMV-chip cards preparing to overtake magstripe in the U.S. in the coming years, the market for a magstripe-only reader—even if it's free—may shrink fast.

Ultimately, the face of the mobile point of sale market will  look a lot like the traditional point of sale market before companies like Square got involved. Merchants don't need to look to a startup for smartphone-based payments anymore; big banks and small banks offer their own Square-like readers.

Even independent sales organizations, the sellers of conventional payment terminals, offer mobile card readers from a variety of vendors.

At this point, alternative payment technology is no longer alternative. It's offered through the same mainstream channels that companies like Square and Groupon sought to disrupt.

So what does this mean for the micromerchants these vendors initially targeted? They can still use mobile card readers without paying for the extra features, or they can do away with the need to add on extra hardware.

Some companies offer systems that scan card details using a phone's camera, while others remove the card entirely from the equation by implementing software-based mobile wallets.

Since Square's debut, its rivals have been wondering if it's is possible to sustain a business by focusing on micromerchants. Square's recent additions of fee-based services like remote ordering and interactive receipts demonstrate that even the company that established this market needs to branch out.

But even if the mobile point of sale market evolves beyond recognition, it's not going away. There is no shortage of companies eager to displace Square, so micromerchants will continue to have a way to accept card payments from a smartphone or tablet.

Even if I'm wrong, there's always P2P.

Daniel Wolfe is the Editor-in-Chief of PaymentsSource.