Should Mobile POS Be About Low Transactions Fees?

Discussion
May 20, 2013

With Groupon’s introduction last week of a free iPad-based payment system, a pricing war appears to be breaking out among developers of mobile-based POS solutions.

Groupon’s Breadcrumb POS comes with a low-price guarantee to "beat any comparable plan on credit card transaction fees." Credit card payments are processed for a fee of 1.8 percent per transaction, plus 15 cents. A launch promotion offers free processing on the first $5,000 in credit card transactions. Small business owners do not have to offer daily deals through Groupon to use the system but rates are slightly higher for non-Groupon users.

Although each plan is bundled differently, the rates appear competitive to other mobile POS providers:

  • Square: Charges 2.75 percent per transaction or a flat fee of $275 a month;
  • PayPal Here: Charges 2.7 percent per swiped transaction;
  • Intuit GoPayment: Charges $12.95 monthly and 1.75 percent per swipe. Merchants can also skip the monthly rate but the swipe fee increases to 2.75 percent.
  • PayAnywhere: Charges 2.69 percent per swipe.

Like many others, Breadcrumb POS includes several other benefits. Merchants can log cash transactions, print or e-mail receipts, calculate multiple tax rates, manage menu items, view transaction history and issue refunds. Receipt of the deposits are received within 24 hours, which Groupon claims is much faster than the typical experience of waiting two to three business days.

Breadcrumb POS also promises in-depth, real-time reports on product mix, daily and monthly sales, past customer purchases and deposit records. It also assures free and easy set up and comes with 24/7 phone technical assistance.

"With this launch we can help every local business replace their outdated cash registers with a modern, affordable, money-saving tool that allows them to save on credit card transaction fees and run their businesses better," said Mihir Shah, VP Merchant OS, Groupon in a statement.

Groupon entered mobile commerce in 2012 with the purchase of Breadcrumb, which had been primarily used by bars and restaurants. Its mobile-POS payments suite also includes Breadcrumb Pro, which caters exclusively to restaurants and bars and adds check and table management, time clock and other features, starting at $99 a month.

Other decision factors involved around mobile POS include the costs of the scanning device, the required length of contracts, and the ability to smoothly handle paper receipts.

What should be the primary and secondary priorities for retail merchants exploring mobile POS? What features beyond cost would be particularly helpful for stores in any POS system?

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10 Comments on "Should Mobile POS Be About Low Transactions Fees?"


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Max Goldberg
Guest
8 years 11 months ago

Retail merchants are primarily interested in lower processing fees. Consumers are interested in convenience and security. The services described in the article offer new ways for merchants to handle transactions and gather and parse information. The fight for transactional supremacy is on. Over the coming years, as these services battle it out, it will become easier and cheaper for retailers to process transactions and gather information and easier for consumers to pay for them. Until clear market leaders emerge, the lack of standards will slow adoption.

Ed Dunn
Guest
8 years 11 months ago

Paper receipts need to become extinct ASAP. Paper receipts are a waste to the environment and extra cost to the merchant. I would want mobile POS to obsolete the use of paper receipts more than any other feature.

Ralph Jacobson
Guest
8 years 11 months ago

Analytics capabilities must be considered along with other functionality with these apps. Additionally, security, uptime and other basic software attributes are critical, of course. I think the market will adopt a few key players with one emerging as dominant in the next year or so.

Robert DiPietro
Guest
8 years 11 months ago

The first thing should be security and speed for the retail merchant. I would also add nimble which seems like an oxymoron when used with POS systems.

Cost is coming down which is great for small businesses, but the ability to get a mobile, fast, nimble POS is an especially great service for small businesses.

Next in importance is transaction and customer analytics. I’m sure this isn’t far behind on Groupon’s roadmap.

Mark Heckman
Guest
8 years 11 months ago

There is a push currently for cheaper payment alternatives (mobile and otherwise) to the increasingly expensive mainstream providers, namely banks and the big credit system providers, Visa, MasterCard, Discover, and Amex. To the extent that alternatives are widely adapted by the consumer will be determined by both the ubiquity of their network and the incentives built into the model to lure users away from their rebates, points, and air miles currently provided by the incumbents.

To that end, mobile options should have a business model conducive to offering competitive incentives to attract users, above and beyond the convenience of using ones mobile device as payment. While the cost of incentives may necessitate increased fees to cover the expense of the service, without them, consumer adaption will be disappointing.

Bill Hanifin
Guest
8 years 11 months ago

Groupon’s offering does seem to be competitive, but they and others in the competitive set should keep attention to the added value they bring to merchants, not just a low price.

At any moment when the threat of competition becomes too great, Visa and MasterCard can make fee adjustments that will trump the best efforts of these start up merchant providers to lead with price.

Tom Redd
Guest
8 years 11 months ago

Pretty easy: security, cost, and info access. Retailers want to know as much as possible about their shoppers (in-store and online) and at the same time the inventory options (price, assortment, etc.) that were available at the time of the purchase.

The mobile POS shop that gets the mix right will win. Many of the mobile POS options that are available will fall by the wayside when one of them locks in on all the key elements that retailers want. This is like the days when we went from 2-line display POS terminals to CRT-based POS.

Very exciting for us retail people, but not a good chat topic to share at family events.

Gene Detroyer
Guest
8 years 11 months ago

I repeat from several weeks ago…but maybe…

1.The dominant payment system does not exist today.
2.The dominant payment system will cost merchants pennies, not percents.

Shanmuga Sundara Raman M
Guest
Shanmuga Sundara Raman M
8 years 11 months ago

Point of Sale has evolved from a cash register to a more intelligent machine that can be integrated with other systems like CRM, loyalty, inventory, etc. Integration with enterprise systems, offline processing and analytics should be a key differentiatior for Mobile POS systems.

Rynder Klomp
Guest
Rynder Klomp
8 years 11 months ago

Lower cost is always a priority for the retail merchant. However, the retailer needs to balance that against what they are providing or taking away from the shopper. In this case, if the shopper expects convenience and security and all mobile POS providers offer those services, then lowest cost wins. If, however, the other service providers offer something the lowest cost provider doesn’t, AND the shopper sees value in the other ‘something’, then that is a horse of a different colour.

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