POS is a term used in retail to refer to Point of Sale. Point of Sale is literally where the sale of goods or services takes place. A Point of Sale system includes all the equipment used by a merchant to process a sale. For instance in a local shop the POS may include the till and chip and PIN machine, at a supermarket you have a checkout.
Accepting Card Payments
The problem many mobile merchants have faced in the past is accepting card payments outside company premises. One way card payments can be verified is over the mobile phone network. Card readers which use mobile GPRS technology have been used by some merchants for years, effectively providing them with a mobile POS.
The trouble with these machines is they are large in size, can be expensive and require a merchant account to be set up to process payments. If many small payments are being processed a minimum charge also normally applies. Because of this many small businesses chose not to accept card payments, accepting only cash and cheques. Since June 2011 cheques have no longer been guaranteed by card, narrowing the payment options for these small businesses even further.
At present 20 million small businesses in Europe do not accept card payments. However, that could all be about to change with a technological breakthrough in mobile POS. The latest card readers available on the market are lightweight, compact and they use the signal on your smartphone or tablet to process card payments.
This type of card reader is useful for many types of business for instance: self employed tradespeople, taxi drivers, salesmen, mobile food vans, hair and beauty professionals, professional services, photographers and artists. Their use is likely to be common soon by small businesses through to PLCs.
The technology was introduced by a company called Square in the US in 2009. Currently there are a number of companies offering mobile card readers in the UK, with other offerings soon to enter the market. All of the card readers have to go through a rigorous process before they are allowed on the market. For instance, they have to be PCI DSS level 1 compliant.
The way the technology works is by processing card payments via an app on the phone. The free app is downloaded then the card reader is connected to the phone via the headphone socket or Bluetooth.
The customer’s payment card is placed in the card reader where the information is read, encrypted and sent to the bank for verification via the phone signal. Once accepted a receipt is sent to the customer by email or SMS. At no point are the card details on the merchant’s phone or tablet.
If you currently have a merchant account you may be able to get a Verifone chip and PIN machine which works with your mobile device. If not there are a number of options available including:
- iZettle offer chip and PIN and swipe and sign card readers. > iZettle
- Payleven offer a chip and PIN reader. > Payleven
The card readers are low cost, there are no setup fees and transaction charges are currently 2.75%. As I mentioned the technology is very new and there is no clear market leader at present. Check back on the blog for updates on this exciting new technology.
I hope you have found this article useful. If you need a quote for chip and PIN or merchant services please use the contact form.