Intuit Plants GoPayment’s Flag in Canada and Upgrades Its Card Reader

Intuit Inc. plans to export its GoPayment service to Canada in the next few months, beating out rival Square Inc. as both companies prepare for international expansion of their smart-phone-based payment services aimed at the smallest of merchants. Intuit also is rolling out a new card reader for mobile devices, one that it says will function better than its existing swipe.

“Canada was kind of a natural first stop for us,” Trevor Dryer, product manager for mobile payments and point of sale at Mountain View, Calif.-based Intuit, tells Digital Transactions News. An undisclosed number of Canadian small businesses already use Intuit’s popular QuickBooks accounting software.

Plus, Dryer sees Canada as ready for a service that does away with long account applications and days or weeks-long underwriting processes for small merchants, the way the U.S. was about three years ago when GoPayment came on the scene. “It’s really ripe for disruption,” he says. “The pricing structure is also ripe for disruption, it’s not transparent [and] hard to follow.”

GoPayment’s pricing is 2.7% of the sale for swiped transactions and 3.7% for key-entered ones, the same rates Intuit offers low-volume U.S. merchants. The software and reader are free. In the U.S., GoPayment applicants get merchant accounts through Intuit’s in-house independent sales organization, but in Canada the accounts will be offered through First Data Corp.

Although First Data will be responsible for underwriting, Intuit is aiming the service at the same merchants it targets in the U.S.: mobile trades people, such as plumbers, as well as part-time businesses and non-profits or community organizations that want to accept payment cards. “It will be a similar approach in Canada, we’re going to cast the net wide,” says Dryer.

Intuit plans to make GoPayment known in Canada through direct marketing to small businesses, online advertising, and by tapping its QuickBooks customer base, according to Dryer.

GoPayment will first operate in Canada on Apple Inc.’s iOS devices that include the iPhone, iPod touch and iPad tablet computer. A version for mobile devices running Google Inc.’s Android operating system is in the works, an Intuit spokesperson says.

Intuit plans to expand GoPayment into more countries that it won’t name yet, and Tuesday’s announcement gives it at least temporary bragging rights over arch-rival Square, which is headed by Twitter co-founder Jack Dorsey. “We are planning on expanding internationally in 2012, but haven’t released to what locations we will expand,” a spokesperson for San Francisco-based Square tells Digital Transactions News by e-mail.

Intuit’s redesigned card swipe, meanwhile, will be available in both the U.S. and Canada during 2012’s first half. The cylinder-shaped device attaches to the mobile phone’s audio jack like the existing one, and has an updated, more attractive look, according to Dryer.

The new reader has a stability-enhancing silicon sleeve that prevents it from moving or spinning when the card is swiped. It also puts cards at an angle, is longer than the old swipe and is beveled, all of which increase the chances of an accurate read of the magnetic stripe the first time the card is swiped, says Dryer. He expects an accuracy rate of 95% or more on the first swipe with the new device versus less than 80% currently. The encryption system, which Dryer says complies with the Payment Card Industry data-security standard (PCI), is unchanged.

Not to be outdone, fast-growing Square confirmed a report in TechCrunch, a Silicon Valley news service, that it plans a big expansion this year. The Square spokesperson says the company, which launched in 2009, had about 40 employees a year ago, has 200 today, and, “We are looking to at least double our employee count this year.”

Square also says it has more than 10,000 retail locations where merchants can get its card reader, recent additions being OfficeMax and The UPS Store. GoPayment also has retail outlets, including AT&T, Verizon Wireless and Staples stores. More retail partners may be announced in the first half, Dryer says.

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