The Green Sheet Online Edition
April 13, 2009 • Issue 09:04:01
Instant mobile processing
The introduction of MerchantWare Mobile may help usher in one of the payments industry's most anticipated developments: the use of mobile phones in POS payments. The new service from Merchant Warehouse does indeed make use of cell phones in such transactions.
However, in this case, phones are being used not to make payments, but to process them.
The system processes both credit and debit cards and can be downloaded free from the iTunes store on any iPhone.
"Merchants can download this for free, set up a merchant account and be processing transactions in a matter of a few minutes," said Henry Helgeson, President and co-Chief Executive Officer of Merchant Warehouse.
A merchant uses MerchantWare Mobile just as he or she would a conventional nonswipe wireless terminal, using the phone's keys to punch in a client's card information and send it over a wireless network.
The consumer data - which is encrypted under the same secure sockets layer security system commonly used in transmitting other sensitive information over the Internet - runs through a transaction server belonging to Merchant Warehouse, where it's also eventually stored.
A transaction approval or disapproval is sent back to the phone along with a mobile receipt, which merchants can print out by connecting a small electronic printer to the phone being used as a terminal.
"I would think this is what we're going to see mobile merchants using more and more, rather than carrying a separate [payment terminal] that has a cost associated with it," Helgeson said.
Helgeson added that while the product is for all mobile merchants, it will especially target those who do "any emergency type of repair," like contractors, tow truck drivers, plumbers and locksmiths.
"It will make sense for them to have something like this where they can key in the transaction and get approval right there on the spot, before they leave the customer's location," he said.
Lower transaction volumes
He added that the service, while free to install, is economical only for merchants with lower-end transaction volumes, given the higher interchange rates attached over keyed transactions compared to card swipes. On the other hand, the wireless fees Merchant Warehouse normally charges mobile merchants are already covered by the iPhone.
"At a certain point, there's going to be a breaking point where a keyed transaction is going to cost you more than a swiped transaction," he said. "If you're going to do a million dollars a month, that merchant would probably get some kind of swipe product."
He said MerchantWare Mobile - which is in limited release and will be made available to the wider public later this month - is the first in a line of similar services Merchant Warehouse plans to offer, including ones on BlackBerry smartphones.
"To carry [a conventional payment terminal] around and have this extra piece of equipment that you have to worry about ... and keeping it in your truck versus just having your cell phone to process these transactions, I think we're going to see a migration away from wireless devices into these handheld PDA devices," Helgeson said.
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