Tomorrow, Verifone will introduce a mobile credit card reader, the SAIL, that plugs into the iPhone and iPad to let very small businesses and sole proprietors take credit card payments.If that sounds familiar, it should. It’s basically what Square has been doing for more than a year.
But while Square is an upstart who had no reputation or sales force when it started more than a year ago, Verifone already has relationships with millions of businesses. Now it’s trying to protect its turf by expanding into Square’s market before Square can move to bigger businesses.
Verifone says SAIL will offer several advantages over Square, including the following:
- It will charge the same 2.7% rate on transactions, but customers with larger transaction volumes can pay $9.95 per month for a lower rate of 1.95%.
- As merchants grow or add multiple locations, Verifone can upgrade them to other products meant for larger businesses.
- Bar-code scanning is built into the smartphone app, offering retailers more flexibility in how they want to check out customers.
- Online tools for tracking transactions, managing inventory, and other functions.
Verifone is also opening the SAIL platform to third party developers. So, for instance, a check-in service like Foursquare could build payment-processing into a future version of its app. Verifone can do this because its core business is payment processing — it doesn’t really care how the payment is accepted, as long as it goes to Verifone for processing.
Square has managed to fend off competitors like Intuit and PayPal (owned by eBay) so far, but Verifone is the 800-pound gorilla of the space — it already has more than 20 million point of sale devices for accepting credit cards, and claims that about 65% of physical retail transactions in the U.S. pass through it.
Sqaure pioneered the category of mobile card readers, but it will have to be smart and nimble to stay ahead.
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