The Green Sheet Online Edition
July 09, 2012 • Issue 12:07:01
mPOS runs circles around PayPal, Square
Square Inc. has soared to over $5 billion per year in payment card transactions, a phenomenal figure. PayPal Inc. has claimed over 2,000 sign-ups per day after its recent launch into the retail brick-and-mortar marketplace. The main reason for the huge dollar volume being processed by Square is that it was developed for person-to-person (P2P) payments, and it works without requiring a traditional merchant account.
PayPal accomplished its sudden deployment and successful campaign to sign up merchants by having an established infrastructure developed via its relationship with its parent company, eBay Inc.
Both companies fulfill a need; however, they are not designed for businesses requiring POS features that integrate with bookkeeping and business management software from Intuit Inc., Oracle Corp., Sage Group PLC, among others. Merchants need technology that can deliver reports, control inventory and monitor transactions.
Cost gets merchants' attention
But the foremost concern is cost. Merchants open their doors and create websites to make money. Business is their livelihood; that's how they feed their families. Therefore, any business with significant sales volume finds the payment processing cost to be critical.
The basic cost for Square and PayPal is 2.75 and 2.7 percent, respectively. A merchant with $25,000 per month in transactions who uses Square to swipe card-present transactions pays around $687.50 monthly - because keyed-in transactions cost 3.5 percent plus 15 cents per transaction. So, $50,000 would cost $1,375, and $100,000 in sales would cost around $2,750. Also, any keyed-in transaction of more $1,000 is held for 30 days.
The merchant's PayPal cost for $100,000 in sales would be about $2,700, plus additional monthly fees in three versions. A virtual terminal is available at 3.1 percent plus 30 cents per transaction. PayPal can also link to an existing merchant account for a $179 set-up fee and $19.95 per month with 500 free transactions.
A merchant processing $100,000 or more using a traditional merchant account can save $700 to $750 per month when charged a more reasonable 1.99 percent, which saves around $9,000 to $10,000 each year. That's a lot of money merchants can redirect to inventory, marketing or even a vacation.
If you search long enough, you'll find a PayPal tiered volume discount rate structure you can apply for, starting at 2.9 percent plus 30 cents up to $3,000 per month; 2.5 percent plus 30 cents from $3,000 to $10,000 per month; and 2.2 percent plus 30 cents for more than $10,000.
Not having to qualify for a typical merchant account means more risk, which is why the pricing is higher, and there are parameters such as volume limitations and payment holds and much more when using Square or PayPal.
Square and PayPal pricing aside, today's merchants also need to offer compelling, differentiated service experiences in their stores. And mobile POS (mPOS) solutions can provide this via new options for in-store mobility, customer interaction and relationship development.
The mPOS supports a variety of sales floor functions, including inventory look-up and management and customer data acquisition. Sales associates may roam the store for line busting inside or outside and can offer parking lot or drive-through checkout.
Servers and sales associates may accept payments at the table in a restaurant or at the door in a store or on a delivery.
The technology also facilitates remote printing and works with legacy system printers or wireless printers. Peripherals for the mPOS, such as bar code scanners, printers, cash drawers, keyboards, mobile card readers and more, are sophisticated and operate intuitively.
Plus, cloud-based mPOS solutions can handle sales in stores and online. All sales personnel have access to the same information, and the database tracks sales and transactions instantaneously.
Merchants can also capture customers' email addresses to send receipts, and customers can opt in to join loyalty programs, receive newsletters or enjoy new and novel buying experiences.
The mPOS is a viable payment alternative to Square and PayPal. By offering this, ISOs and MLSs can help
merchants increase sales and develop loyal relationships, cementing emotional bonds that will have customers spreading the word about their favorite tech savvy merchant.
Rick Berry is Chief Executive Officer of ABC Mobile Pay Inc., a Los Angeles-based provider of mobile payment processing. Contact him by email at firstname.lastname@example.org, by phone at 661-259-2185 or via www.abcmobilepay.com
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