Costs to accept credit cards going down

The price of credit card transactions for merchants are beginning to go down as new players focused on mobile payments want to take market share in the merchant network space. The four companies in this list have simple credit card reader that makes the merchant’s mobile a POS, most of the merchants of their focus did not previously have a POS device to accept cards. 

  • Square: 2.75% of the amount
  • Paypal:  2.70% of the amount
  • Verifone: 1.90% with subscription (2.7% without)
  • Groupon: 1.80% (rumor)

Merchants have long complained over credit card fees and it’s interesting to see these companies working on solutions to bring the cost down.

Another Payment Start-up using QR codes: LevelUp

One of the neighborhood cafés here in the Mission district of San Francisco has started to use a payment service called LevelUp. It’s a closed loop system and the actual POS device is here a basic smartphone that constantly runs an app where the camera is looking for QR codes that customers generates through their LevelUp app and shows in front of the POS phone.

Compared to the Swedish Seqr we wrote about earlier, this is a QR code system more similar to the successful implementations we’ve seen by Starbucks. They also focus on giving money back to the customers and creating loyalty programs with each merchant. 

Thinking about loyalty, savings and other benefits for the customers are key to grow the new payment services, and without attractive packages for the customer, it won’t be possible to grow the business.


Let’s start with common APIs

We have seen the excitement for interoperability fade from last year’s hype. The step from a closed loop platforms to an interconnected system was just too big. In the end the industry will end up there, but the question is where to start.

At the moment the mobile money service providers are busy with integrating with various partners to extend the value proposition for customers. As there are no standards for this type of integration many different APIs and protocols are being used. This creates a mess as customized solutions often are required for many of the integrations. 

The solution would be standard APIs and protocols for services such as, bill payments, bank services, international remittance, etc. This way the integrations would become much cheaper and go faster.

This is what the service providers are in need for right now and would be the first step towards interoperability.Common APIs for Mobile Money

Quick look at new payments pilot Seqr

Let’s have a look at a new pilot in Sweden: Seqr. It’s run by tech provider seamless and bank SBAB. According to the video below they’re trying to solve a problem with our wallets, and they’re doing so by replacing credit cards with an app and a static QR code sticker. 

There are some things that Seqr needs to keep in mind going forward. Right now we have a one-solution-fits-all credit or debit card payment process. It looks the same for big or small amounts, for merchants you visit every day or merchants you visit for the first time. But the need for security and identification looks different depending on the situation, and this is where the mobile can provide an advantage. I don’t see this happening with their solution.

Secondly, having worked a bit with QR codes in the past, it’s a bold move to go for that technology instead of launching an NFC sticker pilot where you put the sticker on the phone and have an NFC reader for the merchant. Opening an app and taking a picture might end up taking longer than swiping a debit card.

Valuable Bits blog is back

After implementing and running mobile money initiatives in three African markets, we decided to start blogging again. We hope to bring you some of the many insights and learnings we’ve had over the last two years building products, agent networks and platforms for mobile money that can grow and hopefully help take the industry to the next level. 

We’re currently based in San Francisco and Dubai/Stockholm, so we hope to bring some new perspectives from these interesting places to the mobile money & payments discussions. Stay tuned for updates!

About me

Gunnar Camner and Emil Sjöblom have been involved with mobile financial services since 2009, and have spent the last couple of years implementing mobile money services in various markets.