Smart phones are revolutionizing the market with rising competition between mobile service providers raising the price war to higher stakes as it shakes up the previously stable world of processing credit cards. Google unveiled an extension for its browser Google Chrome to allow merchant accounts and mobile transactions to be done on the android phones.
However the first on the radar was startup Square that brought out a device to turn any Apple iPhone into a terminal for sale using a small credit card swipe device. You can now have a complete system that can process transactions on your phone without any problems whatsoever. The overwhelming response to these products from the market despite complaints showed that people are looking for some new options to overcome the old fashioned card systems that were formerly used in transactions. At the same time with its history of waging challenges against large credit card firms like MasterCard and Visa continues to push aggressively for mobile commerce.
All of these moves point towards a singular fact, smart phones are here to stay so are newer payment methods and the assault on old payment systems will continue with newer developments in the pipeline. The legacy players will definitely have to deal with changes in their profit margins going ahead.
Magnetic stripes are pass:
Consumer awareness about using these smart phones and the willingness to move with the trend has been the biggest reason for the success of the new options. Mobile payments are being accepted in the U.S. making magnetic stripes an archaic concept that is going out of use. The specialized equipment for reading the data from the magnetic stripes, hardware for the point of purchase and security reasons have made credit card terminals an expensive and complex affair. These all require expenses on part of the big companies in setting these up and they charge service fees between 2- 3% to the merchants. The small businesses have especially been fighting against these fees and the advent of smart phones and new payment methods is good news for them.
In addition a smart phone can carry much more information than these magnetic stripes and can offer superior security for the transactions being done on them. The smart phone through its fast wireless data network is taking out the intermediate players in the business and making things easier and faster. Changes in the future are all looking positive for small merchants giving them an upper hand over credit card lenders.