Battle of the Mobile POS Solutions

Recently Square's mobile payment dongle trend has taken hold in Europe with a swathe of start-up clones vying for a share of the market

Over the past couple of years we’ve seen Square’s mobile payment dongle trend take hold in Europe with a swathe of start-up clones vying for a share of the market. When you look at recent fundraising in the payments value chain, it’s mobile acquiring that’s been attracting the millions of dollars of investment, writes Paul Bartholomew-Keen

Providing mobile payment solutions for traders on the move was the original premise of the traditional merchant services players, who previously went down the route of supplying clunky point of sale terminals that were about as sleek as some of the old mobile phone handsets we’ve been seeing on TV recently for the 40th anniversary of their inception.

Until Square’s smartphone payment dongle came along, mobile POS solutions had remained unchanged for many years primarily due to the traditional players not seeing any commercial benefits in upscaling solutions for what could be perceived as the lower end of the card acquiring market.

So, with the traditional players slow to move, it was only a matter of time before mobile POS would see a similar pattern to what had already taken place with payment service providers (PSPs) filling the acquiring gaps for processing online card transactions.

In the rush to simulate the Square mag-stripe acceptance model, early start-ups like i-Zettle and mPowa overlooked some of the key requirements for Chip & PIN acceptance laid down by the card schemes in Europe which resulted in them only being able to accept MasterCard cards.

The traditional acquiring banks were probably shaking their heads and wearing their “I told you so” T-shirts at how ‘wannabe’ FinTech’s would approach and launch mobile POS solutions. The start-ups are now overcoming these early teething problems by offering compliant Chip & PIN solutions with a separate Bluetooth PIN-pad linked to smart phone and payment app. This is streets ahead of the GPRS POS terminals that are still a commonplace offering from many of the traditional merchant service providers.

But where is the mobile POS market heading now? If we look back at the rise of the PSPs, the online card acquiring market has now become very commoditised with dwindling margins resulting from increased competition and cost pressures from payment regulators and card networks.

The plethora of mobile POS providers are experiencing these issues in a shorter timeframe with Verifone already withdrawing its Sail solution from the market, citing a lack of commercial viability. For merchants wanting mobile POS solutions as well as online card acceptance capability, the options have not been very joined up either.

Until Adyen, the PSP, launched its Shuttle mobile solution late last year merchants would need to go different suppliers for their online and offline payment needs. As investors start to see the need to join online and offline payment acceptance to get their ROI, there will be a push towards consolidation…….and the bank issuers and acquirers will be lying in wait for the right opportunities to pounce.