Intuit, North American Bancard Bring Free Card Readers to Mobile Payments

Mobile payments are getting increasingly competitive, and this week the competition ratcheted up even more. Intuit Inc., maker of the QuickBooks accounting software for small businesses, is now offering a free credit card reader for smart phones to merchants using its GoPayment mobile service. Intuit also is waiving monthly service fees for lower-volume merchants. And the big independent sales organization North American Bancard on Thursday announced its Pay Anywhere service that includes a free card reader and mobile application for Apple Inc.’s iPhone.

Mountain View, Calif.-based Intuit, an early player in smart-phone payments, launched GoPayment in early 2009 and has generated about $80 million in charge volume through it to date. “That’s growing rapidly,” GoPayment program manager Andrew Freed tells Digital Transactions News. GoPayment drives incremental business to Intuit’s big ISO formerly known as Innovative Merchant Solutions. Now rebranded as Intuit Processing Solutions, the unit has nearly 300,000 merchants that generate nearly $17 billion in annual charge volume. Intuit won’t say how many merchants use GoPayment, though Freed says its free app is one of the top three business applications in Apple’s iTunes App Store.
 
The free-reader program is designed for small, often one-person micro-businesses that include tradespeople, contractors, professionals, and service providers, even dog walkers, who often find themselves out of the office. About 50% of small-business owners now have a smart phone, Freed says, citing industry research. “They’re all finding this huge benefit by being able to get paid on the spot without hassles,” he says. “Every consumer wants to pay with plastic. These guys need to take credit cards or they’re going to lose the sale.”

To some degree, offering free hardware might be considered taking a page out of the playbook of United Bank Card Inc., the ISO that pioneered the tactic of giving free point-of-sale terminals to merchants to win their long-term business. Intuit’s free reader, however, is only available until mid-February. Roam Data Inc. supplies the reader, which works with the iPhone, phones using Google Inc.’s Android system, and various BlackBerry models.
 
Intuit is offering two pricing plans. For the smallest merchants, generally those generating less than $1,000 in charge volume a month, there is no monthly fee for those that sign up by mid-February, though there’s a 15-cent transaction charge. Discount rates are 2.7% for swiped transactions and 3.7% for key-entered and so-called non-qualified transactions, an example of which is a sale from a corporate card. Higher volume merchants pay a $12.95 monthly service fee, 1.7% for swiped transactions, 2.7% for key-entered sales, and 3.7% for non-qualified transactions. Merchants must have an Intuit merchant account.

Freed expects the program will be profitable despite the expense of the hardware, because it will tap a well of prospective transactions. “When you look at the number of small businesses out there that are not taking credit cards, there’s a huge opportunity … it more than pays for itself,” he says. Freed won’t disclose the reader’s wholesale cost, but a merchant that wants a second one pays $29.

Also, Intuit has raised GoPayment’s discount rates. Back in 2009, the rate was 1.64% on swiped transactions using an optional card reader, 2.44% for key-entered transactions and 3.54% for non-qualified cards.

Although GoPayment seemingly is pursuing many of the same tiny, mobile businesses that much-watched processor start-up Square Inc. is, Freed doesn’t see the two as direct competitors. Intuit’s model allows for high processing volumes, he says, and in contrast to Square’s unconventional vetting of prospective users, Intuit subjects applicants to more traditional merchant underwriting.

Instead, GoPayment competes more directly with software firms that have partnered with ISOs and e-commerce gateways to enable smart-phone payments. But Intuit differentiates itself by offering one-stop shopping, according to Freed. “You don’t need to worry about some strange deal with some person to handle an Internet gateway,” he says. And, of course, GoPayment merchants can easily integrate their payment data into QuickBooks, though purchase of QuickBooks is not required. Intuit in August began a broad marketing campaign that includes print, online, and television advertising, some of which supports GoPayment.

Meanwhile, Troy, Mich.-based North American Bancard calls its free reader a $149.95 retail value. The app is free in the iTunes store. The Pay Anywhere program doesn’t charge a monthly service fee or set monthly volume minimums, according to an NAB release. Merchants approved for a NAB account pay a flat 19 cents per transaction plus 2.69% and 3.49% for swiped and key-entered sales, respectively. The reader works with the iPhone 3G and 3GS, with a necessary audio jack for the iPhone 4 and Apple’s iPad and iPod touch coming soon.