Bank of America to challenge Square, Verifone in mobile payments
Bank of America will extend its mobile payments service to small retailers in December, allowing them to use smartphones and tablets as point-of-sale terminals.
The entry of the country's largest processor of electronic payments into the small-retailer sector of the market further endorses use of phones as payment terminals and will mean stiffer competition for existing players like Square and Verifone.
Bank of America's Mobile Pay on Demand service will be available from Dec. 3 and will be compatible with Android and Apple iOS devices. The bank will supply a credit card reader and an application that are installed on the retailers' mobile devices.
Targeted at businesses that process only a few credit card payments each day, the Bank of America service will charge retailers 2.7 percent for swiped-card Visa, Mastercard and Discover purchases and 3.5 percent plus $0.15 for transactions where the card number is keyed in. American Express processing is also supported at fees ranging from 2.3 percent to 3.5 percent.
Competitor Square, which popularized the sector when it launched an iPhone payment device in October 2010, charges 2.75 percent per transaction or a $275-per-month flat fee with no transaction charges.
At launch, the Bank of America service will only pull credit card data from the magnetic strip on the cards.
A rival, Verifone, launched a payment device for smartphones and tablets last week that is compatible with the "chip and PIN" credit cards that are in use in many countries. Chip and PIN has become the dominant technology in Europe and relies on a smartcard credit card and personal identification number rather than a signature.
The new Bank of America service is for in-person payments. A similar service, Mobile Pay Business, is already offered by the bank for retailers that process many payments per month in person, by mail and by phone.
Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is firstname.lastname@example.org