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The Green SheetGreen Sheet

The Green Sheet Online Edition

July 27, 2009 • Issue 09:07:02

Mobile payments in the mainstream

By Tim McWeeney
WAY Systems Inc.

The people in the wireless POS industry have been saying it for more than 10 years: Mobile payments are coming. And we have been saying mobile payments are not a niche market but a mainstream form of processing electronic payments.

Now, if we look carefully at one current "redefinition" of mobility, self-proclaimed gurus are telling us mobility means an evolvement to a choice between a cell phone and near field communication. Wrong. The primary purposes of offering merchants true mobility are to increase the available space in which they operate, make it easier to become a merchant and accept electronic payments virtually anywhere.

A new wave of merchants

Since Jan. 1, 2009, nearly 4 million people in the United States have lost their jobs. Most of these jobs are not coming back in any form. This means millions of people are looking at becoming entrepreneurs. They are short on cash and seek a cost-effective way to enter the business community and open a merchant account.

Most of these new businesses will not be traditional brick-and-mortar because of the upfront costs involved and the continued tightening of lending. Most will be mobile merchants looking for a simple, easy, inexpensive way to accept electronic payments.

The cell phone merchant account will not replace traditional wireless POS equipment - it will bolster it. If the emerging industry of cell phone merchant accounts adds 1 million new merchants, how many of those new merchants are going to be 100 percent satisfied with the built-in limitations of the cell phone?

The cell phone is not capable of PIN debit, nor is it capable of many value-added features the wireless POS device carries. For a qualified transaction, a remote Bluetooth printer with a mag strip reader needs to be added to the equation, adding cost to the merchant and still leaving limitations in processing.

The need for further functions

How many of these million-plus new merchants will be coming back to their processors and demanding a more efficient and robust method of accepting credit, debit, gift and check transactions? One-third? One half?

That alone will account for 350,000 to 500,000 so-called cell-phone merchants demanding a full-featured wireless POS device to continue their businesses in a more complete way. With that in mind, processors needs to offer and support all solutions for their merchants.

Pricing of wireless POS hardware to merchants remains an issue. Merchants who are starting their businesses cannot afford a wireless POS device costing them $1,000 or more. A more effective and broader view of wireless is needed to truly capitalize on the potential here. It begins by viewing the market in similar terms to traditional POS devices and not overcharging for the premium of selling a niche wireless device.

Remember that with wireless POS devices you gain full-featured terminals capable of many additional value-added features for merchants. These items are essential to merchants opening their new business.

The challenge is to view this market in its entirety. Mobile payments market growth includes cell phone applications, but it does not end there. We all need to make the most of the tremendous opportunity. The Green Sheet, Inc.

Tim McWeeney is Vice President, North American Sales for WAY Systems Inc., a wireless, cost-efficient POS manufacturer. He is also a member of The Green Sheet Advisory Board. He can be reached at tmcweeney@waysystems.com.

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