Friday, January 3, 2014

New Phone Swipe Promo, What It Really Means

North American Bancard just released a new promotional push for its Phone Swipe product, touting it as a new, first of its kind deal for 2014. The text of the promo reads:    

"This January, be the first in the industry to offer Visa, MasterCard, Discover and even AMEX at 2.69% with next day funding to all pay-as-you-go customers! It's just another reason why Phone Swipe is the mobile payments solution that sells itself!"  

Since the next day funding option has been standard for new accounts since mid-2013, and since American Express cards have been processing on Pay-As-You-Go accounts at the same qualified rate as Visa, MasterCard and Discover for the same period, I wanted to find out which part of this was supposed to be new for the new year. Well, it turns out that it isn't new and nothing has actually changed in the program. The spin is simply the suggestion that agents should take time now - in January - to point out that Phone Swipe is the first processor to offer qualified charges for the main card carriers at this rate. Agents and merchants should still be aware that the same mid/non-qualified downgrade of 80 basis points continues to apply to all accounts on the Pay-As-You-Go plan, along with the $0.19 transaction fee for business signature cards and even rewards cards.

Does this make the Phone Swipe program a bad deal?

If you have read this blog before, you know that I have endorsed Phone Swipe for a long time. I even
provide the service for a hefty percentage of my clients. And I continue to consider it one of the most valuable processing programs on the market in terms of overall cost-benefits to merchants who process under $5,000 monthly. Once merchants are processing over $5,000 every month, there are better options than the Phone Swipe Pay-As-You-Go plan, and in some cases if they are processing over $2,500 each month there are also better deals, largely depending on the type of charges and the amounts being processed. On the other hand, there are some cases where even if the merchant is processing over that $5,000 mark, Phone Swipe might still be more cost effective, which is why a comprehensive analysis is always in order.

Mobile Processing Alternatives: Payment Jack and Harbortouch

It is important to understand that other companies have competing products and on occasion may offer better deals for individual merchants. Payment Jack is a good example: Total Merchant Services, based in California, offers processing over the same network as Phone Swipe using virtually the same technology, but the product does not offer a Pay-As-You-Go plan, nor the full customization of Phone Swipe's Option A program, which offers more flexibility in the contract.

What Payment Jack does offer, however, is a simple, low, tiered rate plan with a small monthly fee and a month-to-month contract. It hits that sweet spot where the costs of Phone Swipe Option A are too high even on an Interchange Plus setup, but merchants are processing enough charges to see the savings of lower rates combined with the traditional monthly fees. Payment Jack won't work for small ticket merchants whose markup is less than $0.30, because every swipe costs over a quarter between the transaction fee and the percentage. But it is great for the plummer or electrician or appliance repair service that breaks the $2,000 mark consistently and has some months even higher. Merchants who need a high end POS system and still need a mobile solution to complement it need to look deeper for something like Harbortouch, which has the ability to be far more integrated into the workings of the business, but then even with the savings associated with processing, the necessity of the tools is almost more important than the cost.

Phone Swipe Upgrades

While Phone Swipe has some problematic issues with its messaging, it still leads the pack in innovation and functionality. There will always be areas where it might lag behind one other company here or there. For instance, Go Payments by Intuit was developed expressly to integrate with Quickbooks, so it is no surprise that it took a while before other players caught up with that. However, Go Payments is much more expensive than the competition and now that other applications allow for Quickbooks integration there is no compelling reason to process through Intuit's system and pay the steep rates. North American Bancard recently updated Phone Swipe again, including the Android app that now looks and feels like the latest iOS version, and rolled out a series of bug fixes on January 3rd. While it would be nice to have the bug fixes done before the software release, this has not been the case with NAB, making every update potentially problematic.

My suggestion is to hold off on updating the software for at least a few weeks if possible. And, before updating, back up the old version first so that it can be re-installed if the new version does not work properly. I encountered issues on the iOS where older Apple devices only work with older version of the software and once they are updated the device is rendered useless unless an old backup can replace the device data completely. It's tricky and requires some forethought, but patience pays off.

Newer devices should not be problematic at all beyond the inherent and unavoidable bugs, but these minor bug-fix updates are always welcome. And, in the grand scheme, these fixes are also one of the things that make Phone Swipe a good option. At the end of the day, the company is always actively working on the apps and offering real support to the product. I'm not always a fan of the way that the roll-outs occur and I am not particularly a fan of the way that the products are sometimes confusingly promoted. I am, however, impressed by what Phone Swipe can do for a small merchant and I continue to find it the best fit for the majority of my mobile clients. It isn't right for everybody and I clearly have other preferences when appropriate, but with a bit of patience and perseverance, Phone Swipe can be a significant tool for maximizing sales while minimizing expenses.

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