Square may get a lot of credit for making mobile payments mainstream, but the ability to accept a credit card using a smartphone is turning into an unmistakable commodity.
The latest to enter the space is Bank of America’s Merchant Services, which unveiled Mobile Pay on Demand, a service that allows small business owners to accept customer payments over a mobile phone.
‘I hate to come out with a commodity product, but every bank should have one,’ comments Trevor Rubel, EVP of Strategy and Emerging Products for Bank of America Merchant Services.
Square is perhaps the most high-profile company in the market and is already processing $8 billion in payments annually. But its head-start hasn’t deterred others from entering into the space, including eBay’s PayPal, Groupon, Intuit, Pay Anywhere and many others.
Bank of America’s nearly identical copycat will be available starting December 3 and will be priced very competitively. The card reader (which is slightly more bulky than Square’s, and is more rectangular) will be free and payments will cost 2.7% per swiped transaction. The mobile application, available across both iOS and Android, is also free.
The rate is priced slightly below Square’s offering of 2.75%, but is slightly above Groupon’s 1.8% plus $0.15 fee (although it also requires merchants to be active daily deal providers). Bank of America charges no monthly or annual fees.
Rubel says he believes that Bank of America has an advantage over the others because it has a very strong, trusted brand. Plus, it already has substantial relationships with retailers, including roughly 2 million small-to-mid-sized businesses that don’t currently use its payment terminals because they don’t process enough transactions to justify it or because they work on the go. He imagines the new service appealing to the usual crowd of taxi cab drivers, participants at farme’s markets and contractors.
Some of the perks provided by the service include next-day access to funds and customer service representatives available by phone. Additionally, retailers will be the merchant of record, meaning that the name of the business will appear on a consume’s credit card statement instead of Bank of America’s or some other provider.