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The principals of a leading software developer and its independent sales organization partner in the card-processing application market for Apple Inc.’s iPhone have bought a key rival, a move they say will enable them to thrive in a fast-changing market that is attracting heavyweight competitors.
Inner Fence LLC and Dublin, Ohio-based ISO Merchant Focus Processing Inc. are the new owners of AppNinjas Inc., publisher of the Swipe Credit Card Terminal for iPhone application that enables merchants to accept credit and signature debit card payments on their iPhones. Inner Fence chief executive Derek Del Conte says AppNinjas, even though it was founded only early last year, was his chief competitor in the booming iPhone payments market. Redmond, Wash.-based Inner Fence released its Credit Card Terminal app for the iPhone in late 2008. “We were neck and neck for a while,” Del Conte tells Digital Transactions News.
Merchant Focus chief executive John Waldron, who also is the new chief executive of San Francisco-based AppNinjas, won’t say how many downloads have been made or merchants have come to Merchant Focus through Inner Fence’s application, but he expects the addition of AppNinjas to give a nice boost to his business. “We will be boarding all the direct merchant accounts that AppNinjas will be signing in the years to come,” Waldron says by e-mail. “The volume is hundreds of merchants per month that we will be able to underwrite and provide processing services to, which is great for us as that is our core business.” In all, Merchant Focus currently is adding more than 1,000 merchants per month to its platform, he adds.
Terms of the deal weren’t disclosed. Waldron says AppNinjas will keep its own brand and identity. Waldron and Del Conte are in discussions with AppNinjas founders Bryan Kennedy and Zander Ford “on what their future roles might look like,” Waldron says.
Both Credit Card Terminal and Swipe Credit Card Terminal, formerly called iSwipe, are available on Apple’s huge iTunes App Store, which Del Conte estimates offers about 30 card-processing applications. Their applications enable mobile merchants to accept card-not-present payments by typing in card numbers. “Our two entities, Merchant Focus Processing and Inner Fence, agreed [that] to compete in this space long term it would be best if we roll up some of our competitors,” Waldron says. “The AppNinjas guys just happened to be our biggest direct competitor so it was a good place to start. We felt getting them under our belt would be best as we felt they understood the space and had a very similar approach as we did.”
Pioneers in this still-young market were software houses such as Inner Fence and AppNinjas working with ISOs to offer merchant accounts to entrepreneurs who downloaded their apps, or some ISOs directly such as Boston-based Merchant Warehouse with its MerchantWare Mobile app. But the market now includes big payments players such as VeriFone Holdings Inc., whose PAYware Mobile program includes hardware that enables the iPhone to take card-present payments; Intuit Inc.; and wireless technology specialist Apriva Inc. (Digital Transactions News, Dec. 8, 2009, and Jan. 20, 2010, respectively).
Market observer George Peabody of Mercator Advisory Group Inc. calls the buyout of AppNinjas “hardly a surprise. The barriers to entry for creating CNP [card-not-present]-oriented applications are low so a merger of competitors makes sense,” he says via e-mail. “They also need to respond given the plethora of hardware-based card-acceptance options for the iPhone that have blossomed this year. Many of those options are from far larger, established firms with significant marketing power.”
The new Square Inc. processing company, which has an application and card-accepting hardware for Apple’s new iPad device and also is working on an app for the iPhone, also could shake up the market, adds Peabody, director of the Emerging Technologies Advisory Service at Maynard, Mass.-based Mercator. Inner Fence came out with an iPad version of Credit Card Terminal in early April and will soon introduce a hardware component to enable the iPhone and Apple’s iPod touch to accept card-present payments, Del Conte says.
