Mobile Payments Price War Heats Up as Pay Anywhere Slashes Merchant Fees
Pay Anywhere is continuing a yearlong price war by dropping how much it charges merchants to use its credit card processing service for smartphones.
The company, which is backed by North American Bancard, a privately held credit card processing company, launched its service about a year ago and is arguably less-known than others, such as Square, run by Twitter’s Jack Dorsey and backed by Visa, Intuit’s GoPayment, or PayPal.
In order to try and change that, Pay Anywhere plans to announce today a price drop to make its rates one of the lowest in the sector — by a very slim margin.
It will now charge 2.69 percent of each transaction; in other words, $2.69 for every $100 charged.
In comparison, eBay-owned PayPal, which unveiled its PayPal Here service on Friday, is charging merchants 2.7 percent of each transaction. Intuit also charges 2.7 percent; Square charges a slightly higher 2.75 percent.
Before today’s cut, Pay Anywhere was charging 2.69 percent, plus a flat rate of 19 cents per transaction, making it one of the most expensive. (A spokeswoman said the Pay Anywhere app has been downloaded more than 100,000 times since it launched. Pay Anywhere and North American Bancard does a combined $12 billion in business annually, but she declined to say how much Pay Anywhere processes alone.)
The practice of charging a flat rate and a percentage was common around a year ago, but the payment structures have changed drastically as the competition heated up. For instance, it also used to be common for providers to charge for the credit-card readers, which plug into smartphones. Those are now free, too.
But it’s unclear whether merchants will be attracted to lower interchange rates alone.
Other considerations to take into account are additional features, such as security or software. A good analytics program on the phone can track a store’s inventory; Intuit offers integration with its commonly used QuickBooks software. Square offers cash-register-like services, and PayPal says it will offer the ability to accept checks by snapping a picture of the check using a phone’s camera.
Likewise, Pay Anywhere touts many of these features, including a “built-in Heat Map” to locate sales trends.
While all of these providers are competing against traditional credit card processors and integrators that typically sell both hardware and services, they are also largely going after a different market — the massive offline business that is conducted in cash or by check.
Many merchants, from farmers to taxicab drivers, have been reluctant to pay the high rates that traditional card-processing services charge today, and only accept cash — or visibly cringe whenever a customer pulls out plastic.