The number of companies using small, mobile credit card readers to complete transactions is growing considerably as consumers and small business owners alike begin to trust this technology more, and it becomes more readily available.
Several tech companies are now offering small businesses mobile credit card readers that connect with any sort of internet-ready handheld device – such as a tablet PC or smartphone – and make secure credit card transactions easy to complete, and those merchants are responding, according to a report from the Minneapolis Star Tribune. The process of mobile credit card payments has become quite popular in the last year, as tech research firm Gartner Inc., found the value of these transactions surged by more than 50 percent to a total of $86.1 billion in 2011.
“They’re extending the existing system to potentially millions of very small merchants – piano teachers, plumbers, electricians … somebody who in the past would take cash or check,” Eric Grover, a payments consultant with Intrepid Ventures, told the newspaper.
The best-known and most successful of the companies processing payments is Square, which was started by former Twitter executive Jack Dorsey, the report said. In a relatively short period of time, Square’s mobile credit card reader, which plugs into the headphone jack of most mobile devices, has become the most ubiquitous of these devices, with more than 1 million merchants nationwide using them. Square processes about $2 billion in payments annually and that number is rising all the time.
Using this type of technology may be good for many small businesses because it will increase the amount of flexibility they have in accepting payments, and can also cut the cost of payment processing fees they pay to credit networks for each transaction, which may allow them to pass the savings on to customers.
Often, these devices are available to businesses free of charge – or at least for a small cost which is then credited back to the company’s account – because the issuers make money from the interchange fees they charge to merchants instead. Typically, these fees run between 1 and 4 percent of a total transaction’s value, depending upon the company’s account type, how much business they do and even whether the card was swiped or its number was typed in.