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Crunching the Numbers on Mobile Payment Systems

Looking into mobile payment applications for your business? Consider this comparison of the leading systems.
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Corrections & Amplifications

The cashless society is coming: American consumers now carry more than 750 million credit cards, while paper currency production continues to decline. In fact, the U.S. Bureau of Printing and Engraving produced fewer $1 and $5 bills in 2010 than at any other time in the last 30 years.

Related: Will This Payment App Make You Ditch Your Wallet?

So why do so many small businesses still refuse to take plastic? After all, the old excuses--excessive transaction fees, hidden costs, cumbersome processing systems--no longer apply. Credit goes to the emergence of new mobile payment applications that enable virtually anyone with a smartphone or tablet to accept credit and debit cards anywhere, anytime. The best known among them, Square, generates more than $4 million in transactions each day.

But Square isn't the only mobile payment processing solution available--it may not even be the best one for your particular startup. Let's crunch the numbers. 

Who created it: Square, the San Francisco-based mobile technology firm led by Twitter co-founder Jack Dorsey.

How it works: Square enables users to accept credit and debit purchases by swiping cards through a small dongle that plugs into their iPhone, iPad or Android audio jack.

How much it costs: Square charges a fee of 2.75 percent on each swiped transaction, and promises no contracts, monthly fees or hidden costs. One caveat: Users who select to enter credit card numbers manually must pay 3.5 percent and 15 cents per transaction.

What sets it apart: Scale. In the past year alone, Square has shipped more than 500,000 card readers and now processes more than a million transactions each month.


Update: As of October, Square shipped more than 800,000 card readers since it launched and is processing more than $2 billion in payments, according to a spokesman for the company.


Who created it: Intuit, the Mountain View, Calif.-based business and financial management solutions provider behind QuickBooks, Quicken and TurboTax.

How it works: Just like Square, the pocket-size GoPayment reader plugs into the audio jack of any supported smartphone or tablet, including devices running the iOS, Android and BlackBerry operating systems. Users can swipe cards or manually enter card data.

How much it costs: The free monthly service, tailored for low-volume users who process less than $1,000 per month, applies a 2.7 percent rate to swiped transactions and a 3.7 percent rate to keyed transactions. A high-volume option, priced at $12.95 a month, charges a 1.7 percent fee on swiped transactions and 2.7 percent on manual entries.

What sets it apart: Integration. Intuit already processes more than $17 billion in annual transactions for approximately 300,000 small-business partners, and its 4 million QuickBooks users can sync GoPayment transactions with the most recent versions of QuickBooks for PC and Mac.


Who created it: North American Bancard, the Troy, Mich.-based payment solutions provider that processes more than $12 billion in electronic transactions annually for 110,000-plus merchants nationwide.

How it works: You know the drill by now--card reader, plugs into the iOS or Android audio jack, etc.

How much it costs: Pay Anywhere charges 19 cents per transaction, plus 2.69 percent for swiped transactions and 3.49 percent for keyed transactions. That's it--no monthly fees or minimums, and no cancellation fees.

What sets it apart: Bells and whistles. In addition to North American Bancard security safeguards and 24/7 customer support, Pay Anywhere touts features like inventory tracking, real-time transaction reporting, e-mail receipts and default tip and tax percentages.

Corrections & Amplifications: An earlier version of this article omitted a fee from a company. The fees for Pay Anywhere are 19 cents per transaction, plus 2.69 percent for swiped transactions and 3.49 percent for keyed transactions.


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