Small traders have historically tended to take cash or cheques in payment for goods or services. However cheques are now close to being a footnote in history (when did you last write one?) and not everyone wants to carry large sums of cash around with them. However the card alternative for merchants has never been simple – expensive hardware (even if subsidised), fixed monthly charges and the ‘difficult to get’ merchant ID; card acceptance providers have never been geared towards the small trader.
However in the space of a few months the market is starting to look very different. New entrants like iZettle with their handset dongle are offering small traders a cost effective (2.75%) option for taking card payments using chip and signature. Emu offers a mobile web site with no transaction charges until you hit Â£1,000 of sales and then it’s a flat Â£4.99 a month. Other providers like mPowa and SumUp are also jostling for customers. Square in the US is taking the market by storm with their mag stripe reader.
What all these providers have in common is using an app and existing hardware – the handset – with only an inexpensive card reader as the additional hardware requirement (Emu doesn’t even use a card reader). By removing expensive hardware from the solution it enables them to offer card payments at a price point that is attractive to small traders. Unfortunately the card schemes have yet to decide how to support these new entrants in a consistent manner – American Express and MasterCard are happy with chip and signature but Visa has yet to embrace this option.
Last week Payleven announced a chip and PIN solution that connects a PIN pad to the handset. Whilst this adds additional hardware to the mix it does mean it meets Visa’s requirements and presents the consumer with the familiar PIN pad. As Payleven is yet to launch it’s hard to gauge whether chip and PIN will be a better consumer handset experience than chip and signature however gaining Visa acceptance is a big plus.
PoweredNow has taken an even more innovative approach to this market by developing an end-to-end business administration product that manages jobs, quotes, invoices as well as payments. Not yet launched, PoweredNow is aiming to offer small traders access to software and services that were previously only available to larger businesses. Whilst PoweredNow has yet to announce details of how the payments element will work, card payments will be embedded into the core functionality of the app to deliver as simple a user experience as the rest of the app.
Whilst it is still early days, there is no doubt that cheaper card payments are here to stay and small traders will find it much easier to make the jump to cards. This can only accelerate the demise of cheques in this market and deliver greater payments convenience to both small traders and consumers; and solutions like PoweredNow mean that small traders could in future run their entire business off a mobile device.
Perhaps the PC vendors will end up the big losers here!
You can follow Jonathan Jensen on Twitter at @sevendotzero