Taking mobile payments

If you have the kind of business that requires getting paid when on the go, you have probably heard that your iPhone can be used for this purpose. If you have a mobile food truck, or set up a booth at a tradeshow, or need to take credit cards for your business, there are now several different hardware add-ons that can scan credit cards, and several additional apps that can work by typing in the credit card number manually.

In the olden times (say last year), retailers had to go through a lengthy process to accept credit cards and often had to purchase a card reader for $150 or more that could only attach to a land phone line. Those days are officially over, and with these iPhone readers, you can get paid wherever and whenever you might be.

All of these apps are still somewhat rough around the edges. There are usually two different fee structures: one in which the card is physically present and is swiped through the reader, and a higher set of fees charged if it isn’t (this is because of credit card policies that carry a greater risk of fraud for cards not present).

Before the portable readers were invented, there were a number of iPhone apps that offered payment processing. The problem with these apps is that because they didn’t have any way to physically swipe the card, they had to charge you the higher transaction fees.

So what is involved with each reader? First, you sign up online with a Web form (or in some cases within the iPhone app itself) to create your merchant account, the type of account that banks require for anyone to accept credit card payments. Part of this process is to identify yourself and authorize your checking account that will collect your deposits. Once your account is setup, you can begin accepting payments with your iPhone.

All of these apps have the ability to email receipts to your purchasers as well as to yourself, and have Web-based management dashboards that show you the status of your purchases and collections. These are nice features and some users of the typical point-of-sale credit card machine might be interested in switching to the iPhone readers too.

If you already have a merchant account with your bank, you still need to setup a new one on some of the readers because each device is tied to a particular payment processor. In the past, merchant accounts took lots of time and effort to setup and had monthly account fees even if you never charged a single credit card on them. That is all changing now with these devices. In each case it was a matter of hours between getting started and being able to accept payments.

All of these solutions are limited to US account holders, and in some cases will only authorize cards issued to US-based addresses too. For a review in ITworld, I looked at three hardware credit card readers, some of which are free:

  • The Square (squareup.com). There are no monthly fees and the reader is free. Fees are 2.75% when cards are present, 3.5% when they aren’t.
  • PayAnywhere.com is aligned with North American Bancard, one of the largest traditional credit card payment processors. It costs $20 for shipping and has similar fees to the Square.
  • Intuit GoPayment (http://payments.intuit.com/) works with two different readers, the free Roam and the $80 Mophie. They also offer accounts for higher transaction volumes for monthly fee of $13. RoamPay from RoamData also works with existing merchant accounts from other vendors. I didn’t test the Roam reader.

Some of the readers are for v3 or v4 of the iPhone only because of they way the fit around the phone’s data connector, while others like Roam and Square fit into the phone’s headphone jack and can support a wider variety of phones. I liked the simplicity of the Square setup and use, but the additional features of the Mophie reader might be useful. You can see the results of my tests here.

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