Breaking Down The New iPhone Credit Card Swiping Competition
For a good time now there have been apps available for the iPhone that have allowed users to input credit card numbers and process transactions through their preferred gateway. However, the game is now changing with the emergence of new swiping hardware for the iPhone that allows users to take credit cards at lower rates and in a more secure manner. At the moment, there seems to be a new solution coming out every week. In this post, we will review the current and best available options and rate each according to:
- Quality of product and features - 5 points
- Flexibility of integration with the payment processor/gateway - 5 points
- Price - 5 points
- Quality of Support and Company Background - 5 points
SQUARE
Quality of Product:
Just about everyone has heard about this company thanks to its Twitter ties and hip marketing approach. Upon visiting their website it is pretty clear that this company is very focused on the look and 'cool factor' of its product, marketing towards young, independently owned businesses (more about this in a minute). The hardware itself is very small and unassuming (about the size of a quarter) which should appeal to many yet on testing it out we couldn't help but notice that the unit's design may lend to wear and tear because of the way it sticks out from the phone's audio jack. It doesn't seem as durable as some of the other hardware tested.
As for the software's features, they are pretty standard. The interface is very clean and is set up to take the customer's signature on the screen by finger and then, after having them input their email, it sends out a receipt. There is also a place for tax and tip. Pretty basic. Transactions can be exported as a spreadsheet for bookkeeping.
As for security, the app uses SSL encryption which isn't quite up to par with many other systems. While the unit doesn't officially work with iPhone 4, we have heard there is a work around that will suffice.
Score: 4
Flexibility and Price:
Like a PayPal or ProPay, Square itself is the payment processor that you must use. There is no merchant account or gateway setup or any of the monthly or startup fees that come with those. Because of this however, there are some negatives. Currently the company has set a $100 high ticket and $700 a week processing limit for new customers!! Their rate is also high at 2.75% and 15 cents a trans for swiped cards. It is clear that this company is banking on small independently owned companies that don't process heavy amounts.
Score: 6
Support and Company
As for support, a lot like PayPal, the company provides an online forum and support ticket system but no direct phone support. The company, created by twitter co-founder Jack Dorsey says it isn't in the hardware game but is revolutionizing the mobile processing industry by simplifying everything...much like PayPal did for web processing. This is a brand new company with no track record and if we have learned anything from PayPal, it is not always best to trust a company with your funds vs. a merchant bank that is better regulated.
Score: 3
Overall Score: 12
VERIFONE PAYware MOBILE
Quality of Product:
Brought to you by the global manufacturer of payment systems, Verifone, this unit resembles an iPhone sleeve with a card reader on the side which plugs securely into the phone's bottom jack. It fits in the hand nicely and makes it super easy to swipe quickly. We liked the overall design and feel better than Square's. The software, while it isn't as clean looking as Square's, is still very easy to use and offers all the same options plus a few other bells and whistles (shows the geographic location where the transaction took place). The company also brags as a big selling point that the unit comes with a stylus that allows for a smoother signature. (the back of a pen will work just as well.)
As for security, this unit uses end to end encryption through Verifone's PayWare gateway which is more secure than Square. Currently, the hardware is NOT compatible with an iPhone 4.
Score: 4
Flexibility and Price:
As stated above, this system works in conjunction with the Verifone PayWare gateway which is specifically limited towards this product and has its own fees depending on how you are set up. This can be a hassle and extra expenses for those companies already set up with someone like Auth.net or PayJunction.
In addition to this, the merchant will also need to get set up with a 3rd party merchant account that is supported by their gateway. Verifone doesn't sell its product directly so the merchant must go through a third party marketing company called an ISO. This can get tricky as each ISO will sell the unit at a different price varying from free upward to over $200. Also, the merchant rates can vary drastically from 1.7%-2% for swiped and 2.15%-4% for keyed in. It all depends on who you get set up with. Also, there are the common merchant account and gateway monthly fees that are typically anywhere from $20-$30 a month + most charge a PCI compliance fee these days that can run up to $300 in annual fees! This rate structure can be a positive for many and too much of a hassle for others.
If you are a business that is processing over $1000 a week in credit cards this is a better option for you since the rate will be far lower than Square's no matter how you are set up and with a merchant account, you set your own limits based on your credit and business volume.
Score: 6
Support and Company
Verifone has years of experience as one of the top manufacturers in the credit card industry. Their products have always set the standard for terminal based transactions. Their shouldn't be a question about the quality of the swiping terminal. However, one drawback to this setup is the ISO that you may be forced to deal with for merchant support. As we have stated in previous posts, many of the bad feelings towards the merchant processing industry come from the poor customer service offered by small ISO's. Many don't provide much support at all and can be unethical in their billing policies. At least with Square you have one company to deal with.
Score: 2
Overall Score: 12
iPay POS with iMag Reader
Quality of Product
Brought to you by Process Away, a company that has specialized in mobile credit card processing, the iPay POS system's app, while not as pretty as Square's or Verifone's is actually the easiest to use. It has all of your options, including tax/tip, client list, email, etc on the main page for easy access. The card reader unit fits in very much the same way as the Verifone unit except it is a little bulkier. This unit does work with an iPhone 4.
As for security, if you use this app with PayJunction's Trinity System, you will have the same end to end encryption offered by Verifone.
Score: 4.5
Flexibility and Price
The iPay POS system can work with most major gateways which is very nice for those who are already set up with an Auth.net or Trinity gateway account. We obviously recommend the Trinity system because of its flexibility in allowing for multiple processing avenues through one system. By going this route, you sidestep dealing with an ISO and get set up with a company that offers the merchant account and gateway in one simple pricing option.
As for cost, if you go with Trinity, you are looking at swiped rates of 1.72% and keyed in rates of 2.3% and a per trans cost of 25 cents (gateway and merchant account combined). There is no setup cost and your monthly cost is $20 a month with no PCI compliance costs. Also, the iMag card reader runs $79.95 for all merchants and the app is free. We feel that this is a very reasonably priced package for any merchant of any size, especially since this also includes a virtual terminal and e-commerce solution.
Score: 9
Support and Company
As stated above, Process Away specializes in mobile credit card processing and has had a very good track record so far. Like with Verifone, most of the support you will need will come from the gateway company and merchant provider. Depending on who you are set up with this can vary from poor to great. Once again, we recommend the Trinity setup as it will cover all of your bases processing-wise while providing award winning customer support.
Score: 3.5
Total Score: 17
Point Breakdowns:
Summary
For fans of PayPal, Square's setup will probably do very well. It is a great match for those merchants who run hobby businesses or do very little processing out on the go but still want to provide that option to their customers. As for those professional businesses that process a lot more out in the field and process credit cards online, the iPay POS/Trinity is a great combo package. Contact us today for more info.
