Tuesday, January 29, 2013

PhoneSwipe Just Got Better

This is just a quick update for those interested in the fast-paced world of mobile processing. As we all know, SquareUp is in bed with Starbucks now. The little white cube is becoming more and more ubiquitous. SquareUp's goal is to make smartphones the new wallet, something that Google also has its eye on and even PayPal has jumped into the game. But what about just getting the best rates for a mobile solution, without the additional motive of sticking your customers with a singular means of paying that only a select few merchants can accept?

Stripping away the branding and the nifty (if unnecessary for the most part) bells and whistles, you are left with a small group of needs. Merchants want low rates and they often want a modest POS system to make transactions easier. While Square does offer a nice version of their software for the iPad, and now some iffy flat monthly rates that might save a small business some money (in a rather narrow window, if you ask me), the recent upgrades in the PhoneSwipe service offered through North American Bancard seem to make it a much more obvious choice for a wider range of businesses.

Lets look at the updated terms rolled out this month.
Some cards (especially corporate cards and some rewards cards)  may still downgrade to the higher percentage normally reserved for keyed transactions. While that rate is lower than the Square rate for keyed transactions, it is a negative for PhoneSwipe if a swiped card went through at that rate. As of January 2013, swiped cards including American Express, the most notoriously expensive brand, will go through at 2.69% with no transaction fee. That means PhoneSwipe generally offers the least expensive route for small merchants when compared to other "Pay As You Go" mobile providers. And the keyed rate is still 3.49% plus $0.19, which is the lowest charge I have seen for manually entered transactions in this category.

Oh, what is that thing that merchants are always asking me about? How quickly will they get their money? The latest update with PhoneSwipe addresses that, too. Standard payment in the credit card processing industry is 48 hours. Let's face it, that is pretty good. A lot faster than going to the bank and then waiting on a deposited check. But Square confused the issue with its wording on deposits, promising to initiate them within 36 hours. That sounds fast, but it is not a promise of a completed deposit, which often took the extra half day or more to clear into the receiving bank. But then Square also had a policy of holding funds from a weekly total over $1,000 for 30 days. NAB now offers a standard deposit of funds the next day. That's right, next day funding on all swiped transactions. Of course, that probably won't happen for Saturday or Sunday transactions, and we all know that banks close every available holiday. But in general, it does mean funds will arrive more quickly and at lower rates when using PhoneSwipe.

The bad news is this only immediately affects new customers with PhoneSwipe. NAB has promised, however, that they will be make these terms available to existing PhoneSwipe customers who establish new accounts in the new system. That is good news for everyone. Except maybe SquareUp, though that company is really focusing in on businesses like Starbucks where they seem to feel customers will come in partly because of the added convenience of being able to pay by having a camera recognize their face or by just having their phone with them.

Personally, I don't feel all that secure with the sorts of digital wallets and personal recognition that is coming into play with the new initiatives being put out there by some of the payment companies like SquareUp and PayPal and Google Wallet. But it may be the wave of the future. In the meantime, while the present is still relevant, I recommend a solution that is easy to use and fairly priced and does the job effectively. That means good customer service and solid software on more platforms with better features. The result in head to head competition for the moment: winner, PhoneSwipe.

Coming soon: Phone Swipe "Option C" is a tiered pricing structure that will allow for merchants to get a pre-loaded tablet placed with them for free, complete with an updated version of the Phone Swipe software. Pricing will be on a three-tier system, most likely beginning with 1.69%, 2.69% and 3.49%. There will be a monthly fee for this option, but with some of the added features rumored to be included, it might be a very smart choice for merchants with card sales between $3k and $10k each month. Anything over that and I would recommend that Phone Swipe "Option A" is probably going to remain a better deal with an Interchange-Plus plan.

1 comment:

  1. One clarification on next day funding with PhoneSwipe. NDF is available for transactions processing before 5pm Eastern time. This is the same with most processors, because the vast majority of credit card business goes through East Coast clearinghouse banks. I've seen a few merchants on the West Coast who are able to batch out later in the evening and still have next day funding, but it is extremely rare.

    What does this mean for PhoneSwipe customers on the West Coast? Well, it's pretty simple: all transactions done before 2pm will be in their account the next business morning, whereas all transactions after that will be in their account the following day (or when they would normally have been getting deposited anyway, before the promise of NDF). More good news for PhoneSwipe merchants, however, is the automatic batching done by the application. Because of the way that PhoneSwipe authorizes transactions, it essentially batches out each time. That way merchant's don't have to worry about hitting a cut-off time with their batches, or batching out twice as many do.