Tuesday, September 25, 2018

Credit Card Processing with the iPhone

Credit: Sandra Waldorf
The Square iPhone Credit Card Processing App

Is there anything the iPhone can’t do? Did you know your iPhone can now process actual credit card payments. The implications are huge for smaller business owners.

Is there anything the iPhone can’t do? Did you know your iPhone can now process actual credit card payments. This has huge implications for the smaller business owner and or individual who needs to pay someone but has no cash at the time. A business can use it as a mobile credit card processer wherever they are based. There are three companies battling for the magnetic strip reader for the iPhone market, hoping to win over mobile merchants with alternatives to the larger, hardwired credit card terminals that are used in bricks and mortar retailers.

Jack Dorsey, co-founder and chairman of Twitter, started Square in December 2009 and recently released its first batch of a tiny, cube-shaped credit card reader. Additionally, VeriFone, global manufacturer of credit card payment systems, recently started shipping its PAYware mobile credit card swiper, which fits like a sleeve over an iPhone. Mophie, who makes iPhone cases, sells its own payment device called Marketplace. Today’s un-tethered mobile workforce is the target of these devices.

Users of the devices include piano teachers, food cart vendors, flight instructors, Craigslist sellers, and independent sellers of one-of-a-kind merchandise like art or designer clothing. The devices are expected to be used by service sellers who come to customers’ houses for things like plumbing repair or cleaning. Currently, users of smart phones can only use apps that accept credit card numbers entered by hand, but merchants usually pay higher fees for these so-called “card not present” transactions, which are more vulnerable to fraud. Is this going to be a boost in sales for the credit card providers? Will more people now apply for credit cards as the use for them increases with innovations like these?

Each of the three manufacturers is marketing their products differently. VeriFone, for example charges its PAYware swiper owners a one-time, $49 fee, plus $15 per month over a 2-year service agreement, and the merchants also pay a per-transaction fee of around 17 cents, as well as interchange fees. But VeriFone is counting on their long history in the industry to win over customers, despite what may look like high costs.

Mophie is marketing on aesthetics, based on their history of designing “beautiful, sexy” iPhone cases. The Mophie Marketplace is an iPhone case with a card slot built in. It costs less than $200 and is compatible with several of the already-existent payment apps for the iPhone.

The Square processor is small enough to hang on a keychain. It plugs into the iPhone audio jack and consists of a magnetic strip reader that converts card data into audio tones that are deciphered by Square’s iPhone software. It will also be compatible with the Android and other smart phones when the corresponding software is ready. There is no pricing structure yet, but Square plans to distribute the hardware for free and make their money on the individual transactions. Square doesn’t require individual merchant accounts with banks.

The innovations in credit card readers for the iPhone and in the works for other smart phones is giving individual merchants and service providers more options for accepting payments from their customers and unleashing them from hardwired credit card processors and “card not present” transactions.

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3 comments on Credit Card Processing with the iPhone

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By andrewsminth on August 01, 2010 at 08:29 pm

Mostly of this iphone might be in a fraud. What will be the best tips or any idea to avoid fraud in terms of credit card or merchant services through card

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By Shanie on August 10, 2010 at 02:24 am

I think this will help us in managing well our finances though we still need more information on this. The automotive bailout may have prevented the "too big to fail" companies from imploding economically, but that doesn't mean that their financials are on Easy Street. Ford Motor Company chair Bill Ford's self-imposed pay freeze from back in 2005 helped Ford perform well. I found this here:  Report abuse

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By Julius_Y on August 27, 2010 at 04:24 am

Perhaps, everyone is already aware of scam. High interest rate being charged to your credit card account could be an example of fraudulent act. So, in order to help consumers on this matter, a final set of new credit card rules went into effect. Late payment fees and other penalties is the target of the most recent rule changes. This completes a major overhaul of the credit card industry that was set into motion by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. Late payment charges cannot exceed $25 less than one of the newest federal laws. Credit card businesses have implemented drastic interest rate increases as the brand new guidelines have been introduced. One with the new guidelines calls out the card-issuers to either support those increases with legitimate reasons or roll them back.

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