Accept mobile credit card payments anywhere with your iPhone
Photo credit: coleypauline on flickr
Do you need to take credit card payments on the go for your business? Do you operate a food truck, maybe, or sell your wares from a booth at trade shows or craft fairs? There are now several different hardware add-ons that can turn your iPhone into a credit card processor. (There are also several additional apps that accept manually input credit card numbers; see the sidebar for more information.)
In the olden days -- last year, say -- retailers had to go through a lengthy process to accept credit cards, and often had to pay $150 or more to purchase a card reader that could only attach to a land line. Those days are officially over, and with the iPhone readers we'll review here, 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 for when 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 there’s greater risk of fraud for cards not present.)
To use any of the readers reviewed here, you begin by signing up online with a Web form (or, in some cases, within the iPhone app itself) to create a merchant account -- a type of account that banks require for anyone to accept credit card payments. As part of this process, you must identify yourself and authorize the checking account that will collect your deposits. Once your account is set up, you can begin accepting payments with your iPhone.
All of the apps described here 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'll need to set up a new one, because each device is tied to a particular payment processor. In the past, merchant accounts took lots of time and effort to set up 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, we were able to accept payments within hours of starting the process.
All of these solutions are limited to US account holders, and in some cases will only accept charges from cards issued to US-based addresses too. We looked at three hardware credit card readers, some of which are free. (There is another reader available, called RoamPay, which we didn't test.)
Next page: Square
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There are no monthly fees to use Square, and the reader is free. The reader is a small white square that fits in the audio jack at the top of the phone, so you don't have to remove your iPhone's protective case to use it. You swipe your card vertically to the phone through its small slot. Another plus is that Square's fee schedule is dirt simple: 2.75 percent of all transactions where you swipe a card. If you don't swipe them through the reader, the fee jumps to 3.5 percent plus 15 cents per transaction.
Square works with a wide set of devices and credit cards, including the original and latest iPhone, and the iPad; there's a version for Android as well. With Square, you can accept Visa, MasterCard, Amex, and Discover credit and debit cards.
For your first high-fee transaction (above $1,000) each week, Square will pay you the initial $1,000 and hold back the remainder for a month. The company will review your account and adjust the limit if you send an email and ask nicely. That is the biggest drawback to an otherwise simple service.
Speaking of which, Square's support is limited to emails and what you can glean from their Web site. There is no phone support. That is the other drawback, although really in our experience things just worked as intended.
Next page: PayAnywhere.com
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PayAnywhere.com is aligned with North American Bancard, one of the largest traditional credit card payment processors. The reader will set you back $20 for shipping. Unlike the Square reader, it fits on the bottom end of the iPhone and looks like half a protective case, with the credit card slot swiped horizontally. This leaves the top portion of your phone naked. It currently works on the iPhone 3 or 4, or the iPad. Android and Blackberry readers are planned.
Fees are similar to Square's: 2.69% plus 19 cents per transaction for swiped cards, and 3.49% plus 19 cents for manual entries. This service accepts the fewest cards of the three we examined: only Visa, MasterCard, and Discover.
PayAnywhere.com's biggest advantage is its 24/7 phone support. When we called to verify our account, we got some contradictory information about what the monthly charges would be. (In addition to the fee structure listed above, PayAnwhere also offers monthly accounts that carry fees but lower per-transaction percentages.) You can access your reports from within the app itself as well as on the Web portal.
Next page: Intuit GoPayment/Mophie
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I am a big fan of Intuit's financial products; until recently, I used their merchant services for my infrequent credit card processing. The GoPayment system is an improvement in terms of fees and convenience. It comes with a free Roam reader when you sign up for a new account, that is similar to the Square and that fits in your phone's audio jack, but I didn't test that Intuit can also work with a second type of reader called Mophie that sells for $80.
If you go to Intuit's Web site, you'll find two plans: one with no fees but higher rates per transaction (2.7 percent plus 15 cents for swiped cards, 3.7 percent plus 15 cents for manually entered numbers) and one for higher transaction rates that will cost $13 a month with lower fees (1.7 percent and 2.7 percent plus 30 cents per transaction, respectively). Either plan includes the free Roam reader. This is a better deal than the Online Terminal plan I used to use, which didn't include the reader. Anyone who is still using that plan should switch and get lower transaction fees, even if they don't have an iPhone. If you use Quickbooks to run your business, Intuit does a nice job integrating your merchant account payments with that software, so you don't have to re-enter your transactions. Intuit has a great series of online demos and tutorials on their Web site, along with extensive documentation.
There are two different Mophie physical readers: one for the iPhone 3 series and one for the iPhone 4 series. This is because the reader is actually integrated into a protective case that completely surrounds the phone, unlike the PayAnywhere.com reader that just goes halfway around the circumference. Intuit can set up multiple users on your iPhone too.
Of the three services examined here, the Intuit is the only one that accepts JCBcards, which could be important to you. Their plans also work with Visa, MasterCard, Discover, and Amex, and Intuit offers phone support.
Your cash register, your phone
Any of these readers is definitely the next step for retailers and offer tremendous utility and flexibility in payment processing. The two biggest issues will be if you have the right iPhone version and can anticipate your fee schedule for your charges. If you do a lot of charges, then the Intuit $13 a month plan will quickly pay for itself. I liked the simplicity of Square's setup and use, but the additional features of Intuit's reader might be useful. If you are the type of person that likes telephone support, then PayAnywhere.com is the most responsive.