Another Square Copycat: Bank of America Launches Mobile Payments
Square may get a lot of credit for making mobile payments mainstream, but the ability to accept a credit card using a smartphone is turning into an unmistakable commodity.
The latest to enter the space is Bank of America’s Merchant Services, which today is unveiling Mobile Pay on Demand, a service that allows small business owners to accept customer payments over a cellphone.
“I hate to come out with a commodity product, but every bank should have one,” said Trevor Rubel, EVP of Strategy and Emerging Products for Bank of America Merchant Services.
Square is perhaps the most high-profile company in the market and is already processing $8 billion in payments annually. But its head start hasn’t deterred others from entering into the space, including eBay’s PayPal, Groupon, Intuit, Pay Anywhere and many others.
Bank of America’s nearly identical service will be available starting Dec. 3 and will be priced very competitively. The card reader (which is slightly more bulky than Square’s, and is more rectangular) will be free and payments will cost 2.7 percent per swiped transaction. The mobile application, available across both iOS and Android, is also free.
The rate is priced slightly below Square’s offering of 2.75 percent, but is slightly above Groupon’s 1.8 percent plus 15 cents fee (although Groupon also requires merchants to be active daily deal providers). Bank of America charges no monthly or annual fees.
Rubel says he believes that Bank of America has an advantage over the others because it has a very strong, trusted brand. Plus, it already has substantial relationships with retailers, including roughly two million small- to mid-sized businesses that don’t currently use its payment terminals because they don’t process enough transactions to justify it or because they work on the go. He imagines the new service appealing to the usual crowd of taxi cab drivers, participants at farmer’s markets and contractors.
Some of the perks provided by the service include next-day access to funds and customer service representatives available by phone. Additionally, retailers will be the merchant of record, meaning that the name of the business will appear on a consumer’s credit card statement instead of Bank of America’s or some other provider.
For those merchants that sign up by the end of the year, they will also receive a one-year subscription to Bank of America’s deals marketing platform, which normally costs $200. The platform allows business owners to create a Web site, and to distribute Groupon-like offers, coupons or loyalty programs. The offers are syndicated across several sites, including Facebook, Twitter or 8coupons.com. When offers are redeemed, Bank of America will charge merchants small fees, depending on the type of offer.