organizing the mobile point of sale ecosystem | june 2013 · 2011 to 2012 (from 4.5 million to 9.5...

Organizing the Mobile Point of Sale Ecosystem | June 2013 Ecosystem Analysis

This report has added 7 new players to

the MPOS Pyramid™ and offered new

insight into the range of players and

services entering the space.

The big takeaway: as the state of the

mPOS market intensifies players are

working to seize their piece of the pie

through incentives. However competing

on a price is a race to the bottom.

Applications that add value to the

business is what will sustain merchant

interest

The June 2013 MPOS Tracker™

The weather isn’t the only thing that is getting warmer now that Summer has arrived - the state of the

mPOS market is certainly heating up.

To start the month of June off, we learned how important mPOS is to Visa, the world’s largest payments

network, in its quest for expansion. At its investor day on June 7th, Visa execs cited a recent Javelin

report that pegged the size of the mPOS market as 70% of

all US merchants (or 19 million of them) that today don't

accept electronic payments. That represents a $1.1

trillion market opportunity. Visa believes that mPOS is

the vehicle to capture that volume, and all indications are

that they are correct. The number of mobile point of sale

terminals worldwide increased more than 100% from

2011 to 2012 (from 4.5 million to 9.5 million) and analysts

project that the number of mobile terminals will reach 38

million by 2017 – an increase of more than four times in

as many years. Interestingly, that is roughly as many

merchants as Visa serves worldwide today.

It’s no wonder that more than 100 mPOS players are

chasing after it for their piece of the pie.

There are many ways that mPOS providers are trying to

differentiate themselves in order to seize their piece of

this rapidly growing pie. One way is by offering incentives. These incentives take a variety of forms.

Some players are positioning themselves as the “low cost” provider, competing strictly on the cost to

process transactions. Others are allowing merchants more of a “pay as they go,” model which avoids

long term contract lock in. PayPal, is going one better. Starting in mid-July, it is waiving transaction fees

for up to $20,000 worth of transactions each month (through January 31, 2014) for any qualified small

business that wants to toss their old cash registers and get a modern point-of-sale system offered by

PayPal (its Here platform) or one of its partners.

Another strategy is thru the “credentialing” process that applies the mPOS equivalent of the Good

Houskeeping seal of approval to its devices and platforms. Visa and MasterCard have both established

such programs in an effort to establish an mPOS industry standard and make it easy for applications,

A Monthly Update on the State of the Mobile Point of Sale

Ecosystem

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device manufacturers and peripherals to adhere to a consistent way of doing business. Visa’s program,

Visa Ready has certified five players overall, including iZettle, SumUp and Swiff in June. MasterCard’s

program, MPOS Best Practices Program, has certified eleven.

And, finally, some players view distribution as the way in which they will not only try to differentiate

their solution but accelerate adoption. Recently, banks have become important distribution channels, as

have traditional retailers.

In short, June’s activity implies three things:

Scale matters. As we’ve said before, given the type of merchant that most mPOS solutions are

initially targeted to reach, the small or micro-merchant, it is really hard to sustain any sort of

business longevity without it. Transaction volumes individually are much too small.

Distribution matters. Channel partners become important drivers of scale. What’s been interesting

to observe is the unique ways in which channel deals are being struck. The PayPal “kill the cash

register” program, for example, is leveraging PayPal’s value proposition (and cash register of

incentives) and a network of POS partners with integrated POS solutions and in some cases, their

own pipelines and relationships to gain market momentum and share.

Value matters. Competing on price is a race to the bottom since there will always be someone

cheaper. What seems much more sustainable is a strategy that includes applications that add value

to the merchant business. That is sustainable source of differentiation for merchants and mPOS

suppliers.

June 2013’s report features seven new players to the MPOS Pyramid. The new merchant facing players

are I Love Velvet, Pay Me Russia, payPLUS, Punchey, Visa mPOS, WorldPay and a new supplier, Infinite

Perferials. In addition, we’ve updated seven players from prior months. They include the following

merchant facing players: GlobalBay, iZettle, Montise, Payleven, Payfirma and Paypal Here.

The MPOS Organizing Methodology:

The MPOS TrackerTM Pyramid

The organizing framework for the

MPOS ecosystem is the MPOS

PYRAMID™. It’s a graphic

representation of where we think

merchant facing service providers fit

in the market. As stated earlier, it’s

not designed to suggest that one

part of the pyramid is better than


another; but rather to depict the characteristics of MPOS solutions. That means that the tip of the MPOS

PYRAMID™ doesn’t imply the “best” it simply implies that the fewest players are concentrated there

given the various elements of the service offering that those merchant facing players provide to their

merchants.

MPOS PYRAMIDTM Methodology

We have divided the MPOS market into “layers” representing the broad set of capabilities included in

the MPOS service offerings. This, we hope, more easily helps to categorize the MPOS ecosystem by

focusing on the capabilities that the various players who serve the merchants in this market offer them.

The “powered by” players are organized on the outside of the MPOS PYRAMID™ and aligned with the

appropriate capabilities that they “power” inside of the pyramid.

Here’s how we have used the MPOS PYRAMID™ to organize the MPOS sector.

Core. Players in this quadrant offer only the basic hardware/ card reader solutions to merchants that

enable mag stripe card acceptance and merchant processing services. Players in this space also have

provided some level of security encryption, although the level of security varies by powered-by provider.

This is where many players enter the market to establish an MPOS presence and merchant base.

Core + Back Office. Players in this quadrant have offerings that provide value-added solutions that

enable merchants and other SMBs to perform important back office functions. These functions include

tracking/managing inventory, creating invoices, integrating with accounting systems and/or other

applications thats assist merchants and SMBs in managing their back office.

Core + Front Office. Players in this quadrant have offerings that provide value-added solutions that

enable merchants and other SMBs to perform important customer-facing functions. These functions

include loyalty, marketing, CRM and advertising solutions that enable merchants and SMBs to more fully

manage support marketing, sales and customer retention activities.

Core + Front and Back Office. Players in this quadrant have offerings that provide value-added solutions

that enable merchants and other SMBs to support both front and back office functions as described

above.

Merchant/Consumer Network. Players in this quadrant have offerings that leverage mobile technology

to serve both the merchant/SMB and consumer. These players provide core + front and back office

capabilities along with consumer-facing applications such as digital wallets. These players use mobile

devices and other assets on both the consumer and merchant side to create a network enabled by

mobile devices (phones and tablets) and relevant applications.

Open Platform/API. Merchant-facing players in this layer are serving merchants directly but have also

made a decision to open their hardware/software services to developers via APIs. This is an effort to

expand the number of merchants/SMB’s that they can reach as well as to make it easier for their own

solutions to be enriched by other developers who can add functionality to the core offer.


MPOS Player Profiles | New for June 2013

I Love Velvet

Category Core + Front

When Launched 2013

#Customers/volume 50,000 Devices in the market

Customer Focus Corporate Home Service/Delivery Markets in various “Industry Verticals” such

as QSR, Insurance, Healthcare, Maintenance/Miscellaneous Services, Auto

Aftermarket Service, etc. Merchant-as-ATM market in developing economies.

Geographic Coverage Global

Pricing n/a

I Love Velvet is an ISO that launched its mPOS solution in May 2013. It’s hardware device is not a dongle

but a “sleeve” into which an iPhone, iPod Touch, iPad and/or iPad mini rests that has a slot for a card to

be swiped. These “sleeves” accept mag stripe cards and are also EMV certified to authorize PIN and

integrated chip (IC) payments from credit, debit and smart cards across the globe. The I Love Velvet

software solution is supplemented by a cloud-based software suite that includes loyalty,

CRM/personalization and purchase history. It positions its value proposition to small merchants as one

that reduces wait times and enables more transaction activity.

Pay-Me Russia

Category Core

When Launched October 2012

#Customers/volume Volume less than 5 M annually

Customer Focus Small/Medium/Large e-commerce, online retailers, insurance agents, taxis as well as delivery services (express parcels, pizza & food, etc)

Geographic Coverage Russia, Kazakstan and Ukraine

Pricing 2.75% for MasterCard, Maestro and Visa payments

Pay-Me Russia is a mobile card reader that can accept both mag swipe and EMV PIN payments. The

reader is issued by the mobile operator Vimpelcom, operating under the Beeline brand. The system is

run in coordination with Alfa Bank, Visa and the Pay-Me terminal operator. This device is positioned

with merchants as a way to reduce the risk of fraud, something that is of great concern to Russian

consumers, since they will have more confidence in transacting with merchants if they can use a credit

card.


payPLUS

Category Core + Back + Front

When Launched June 2013

#Customers/volume n/a

Customer Focus Retail chains, Supermarkets, Restaurants, and Service Establishments including Insurance

Geographic Coverage India

Pricing n/a

payPlus is a mobile point of sale solution that is being offered by Mahindra Comviva, which is a global

provider of financial and other value-added services. It’s targeted to retail chains, supermarkets,

restaurants, as well as some service professionals, including insurance. The hardware solution enables

merchants to conduct business with debit/credit cards as well as to connect to a cash drawer. Its

software platform is powered by Mahnidra’s mobiquity platform which powers mobile banking,

payments and mobile money for a variety of players in the mobile financial services system in

developing countries, including banks, billers, merchants, payment gateways and merchant websites.

The payPlus software layer includes a promotional application that leverages location based services to

enable merchants to deliver consumer offers and discounts based on their location/ proximity.

Punchey

Category Core + Front + Back


#Customers/volume 500 businesses

Customer Focus Small retailers and some service businesses

Geographic Coverage US

Pricing

.75% + interchange (Typically between 1% to 3%)

Punchey is a dongle-based solution that is positioning itself in the mobile point of sale market as the

“low cost” provider. It offers dongles in a variety of colors and custom pricing which is pegged to

merchant categories. Its software platform provides access to customer relationship management tools,

e-invoicing and loyalty and rewards capabilities that can be used by small merchants. It recently raised a

$1.7M Series A round of funding from Stevens Ventures.


Visa mPOS

Category Core + Open

When Launched May 2013


Customer Focus Small scale retailers and individual merchants, but

also large scale enterprises

Geographic Coverage Taiwan

Pricing n/a

Visa, Inc. is working with nine major Taiwan-based banks to introduce Visa’s mPOS solution in the

country. Participating banks include Chinatrust Commercial Bank, Cathay United Bank, Taishin

International Bank, Taipei Fubon Commercial Bank, Bank SinoPac, EnTie Commercial Bank and Union

Bank of Taiwan. The card reader attaches to a smartphone and is available for both Android and iOS

operating systems and will also be able to read EMV chips. The reader will meet the security

requirements set by MasterCard, Visa and Europay for secured electronic transactions based on

integrated circuit cards and IC cards capable of POS transactions. It will initially be targeted to smaller

merchants but is said to be easily scalable to meet the needs of larger enterprises. This is a slight

departure for Visa which in other parts of the world is certifying third parties/partners to deploy mPOS

solutions as part of the Visa Ready program. The Visa Ready Program for mPOS is designed to help

device manufacturers, software developers, merchants, and acquirers build and implement solutions

that meet Visa’s requirements for a reliable, convenient, and secure mobile point of sale experience.

WorldPay

Category Core


#Customers/volume

Customer Focus SMB Service/Electricians, Window cleaners, Beauty therapists Micro-merchant retail/Market stallholders

Geographic Coverage UK

Pricing Pay as you go – no long term contract

£59.99 for reader and 2.75% per transaction

WorldPay, the UK’s biggest UK merchant acquirer and payment processor by volume, has launched its Zinc mobile point-of-sale device with Chip and PIN capability on Apple iOS powered or Google Android-powered tablets or smartphones. The launch followed a 6-month trial involving 3,000 small businesses in the UK. Small businesses that sign up will also be able to take payments over the phone, by text or


email, accept refunds, print receipts and get real-time access to full payment history data, covering the day, week or month. Zinc can either be purchased online or John Lewis shops across the UK. Small businesses can receive payments and review payment details within 24 hours after applying, and settlement will take four days.

MPOS Merchant Facing Players | June 2013 Updates

iZettle


When Launched August 2011

#Customers/volume 50,000 Merchants

Customer Focus Small merchants in Europe that don’t accept cards

Geographic Coverage Sweden, Denmark, Norway, Finland, the UK, Germany, France, Spain and

Mexico

Pricing

2.75% for MC and Diner’s Club or 2.95% for AMEX

Update: iZettle is expanding to Mexico and was certified by Visa as part of its Visa Ready mPOS

program. iZettle signed an agreement with Visa to have their mobile acceptance hardware and software

tested and approved for use with Visa payments and be part of the Visa Ready Program.

Monitise


When Launched May 2013

#Customers/volume N/a

Customer Focus All sized businesses

Geographic Coverage Global

Pricing n/a

Update: Lloyds Banking Group partnered with mobile financial technology company Monitise to develop

mobile card acceptance solutions for micro-merchants, startups and small business owners. It is the first

UK bank to join the mPOS market.


GlobalBay

Category Core + Front

When Launched November 2011 (bought by Verifone)


Customer Focus Tier 1 and Tier 2 retailers

Geographic Coverage US

Pricing

n/a

Update: VeriFone and Lenovo announced that they would be offering a mPOS platform powered by

Windows 8 Pro to integrate with existing retail store systems.

Payleven

Category Core + Front + Open



Focus All merchants and private individuals

Location Germany, The UK, Italy, Brazil, The Netherlands, Poland and Spain

Pricing 2.75%

Update: Payleven secured a partnership with the Taxi and Car Rental Association (BZP) in Germany,

where BZP members only pay 69 Euro with 2.75% per transaction and no contracts or fixed fees will be

required.

Payfirma

Category Core + Back + Open



Customer Focus All areas of business

Geographic Coverage Canada

Pricing

$25 set up fee + $10 monthly fee + 1.99%-2.92% + $ .25 / swipe A minimum monthly fee of $40 is applied to companies that don’t process more than $2,800 per month


Update: Payfirma partnered with credit card processor BluePay Partners in order to offer a full POS

tablet payment solution.

PayPal Here

Category Core + Network

When Launched March 2012

#Customers/volume 200,000 Merchants

Customer Focus All areas of business, merchants

Geographic Coverage US, Canada, Japan, Hong Kong, Australia and UK

Pricing

2.7% transaction fee, with no monthly fee. The fee for non-swipes goes up to

3.5%, with a $ 0.15 fee

Update: PayPal has also made its offer of no transaction fees for qualifying businesses that “kill their cash registers” and upgrade to one of its mPOS system to include ERPLY, Leaf, Leapset, and NCR Silver (ShopKeep POS and Vend were the first to launch).

SumUp

Category Core + Network

When Launched August 2012


Customer Focus Small to midsize companies that don’t already have terminals (taxis,

craftsmen, market traders)

Geographic Coverage UK, Ireland, Germany, Austria, Italy, Spain, The Netherlands, France, Belgium,

Portugal, and Russia

Pricing

2.7% transaction fee

Update: SumUp signed an agreement with Visa to have their mobile acceptance hardware and software


Swiff


When Launched End of 2010


Customer Focus Tier 1 and Tier 2 retailers and acquiring and issuing

banks

Geographic Coverage US, Switzerland, France, Singapore, Malaysia, Thailand


Pricing

Vary based on local bank charges, country of operation and type of business

Update: Swiff signed an agreement with Visa to have their mobile acceptance hardware and software


MPOS Supplier | June 2013 Updates

Infinite Peripherals

In June 2013, the company released a new mPOS reader that is compatible with the Apple iOS devices

and enable payment via mag swipe and barcodes (1D and 2D). The company’s readers can be used for

payment acceptance, inventory management, asset tracking, ID verification, lead tracking,

inspection/work flow and various functions that are unique to the healthcare industry.

In addition to readers Infinite Peripherals also manufacturers receipt printers, cases and stands. The

company has worked with Amtrak to develop eTicketing on board trains and has also worked with the

outdoor goods retailer, Moosejaw to implement iPod mPOS acceptance in all stores.


Appendix

Core Back Front Back + Front

Open Back + Open

Front + Open

Network

BlueBamboo Circle it Up EverPay Flint iKaaz JUSP Mosambee Mswipe MTS POS O2 pay@mobile Payleven Pay-Me Russia PayTooSwipe PocketPOS Softspace Spire/Thyron Swish Vantiv Visalus YES Bank WorldPay

Adyen Cube Ezetap I Love Velvet Intuit Gopayment PayAnywere RevCOIN Sage Payments

Citibank Corduro GlobalBay GoPago Groupon MRL Posnet Punchey Mobile Pay On Demand Revel

Kalixia Pro KWI Cloud9 Lightspeed NCR PaySimple payPLUS Retail Cloud Sales Vu ShopKeep Spark Pay

Handpoint iZettle Monitise Miura Shuttle Mpowa Payleven QFPay Visa mPOS

Payfirma Swiffpay Square PayPal Here SumUp

Key – Bold Italics is new to the pyramid as of June 2013


Mobile Readers’ Costs

Player Pricing

Adyen €10/month Processing fee varies between 1.60% - 3.95%

BlueBamboo n/a

Circle It Up n/a

Citibank n/a

Cloud9 n/a

Corduro Varies, 2.5% per swipe and manual is 2.9% + $.20

Cube

2.5% per swipe or 3.5% per key-in card information or integration into existing merchant account

EverPay n/a

Ezetap Hardware Rs. 1500

Flint 1.95% - 2.95% + $0.20/charge

GlobalBay n/a

GoPago 2.85% plus $0.10 on transactions under $12

Groupon Swiped 1.8% + $0.15 per transaction, Keyed 2.3% plus $0.15 per transaction

Handpoint 2.65% per transaction and £9.99 or 1990 ISK monthly fee

I Love Velvet n/a

iKaaz n/a

Intuit GoPayment

$12.95/month and 1.75% swipe and 2.75% entered or 2.75% swipe, 3.75% keyed without monthly fee

iZettle 2.75% for MC and Diner’s Club or 2.95% for AMEX

JUSP n/a

Kalixia Pro n/a

KWI n/a

Lightspeed $1,098-$3,875 per program for one license

Miura Shuttle n.a

Mobile Pay On Demand 2.7%/swipe or 3.5% + $.15 per keyed in

Monitise n/a

Mosambee n/a

mPowa 25% or minimum charge $0.40 or £0.25 or €0.30. Or 2.95%, depending on country


MRL Posnet n/a

Mswipe n/a

MTS POS Between Rs.200 – Rs.300 per month

NCR Silver

Full hardware package is $599 a month to connect a mobile device. First device is $79/month and additional are up to $29/month. ($.10 per transaction up to $29)

o2 £20 for the POS and 2.75%/transaction

pay@mobile n/a

PayAnywhere 2.69%/swipe

Payfirma

$25 set up fee + $10 monthly fee + 1.99%-2.92% + $ .25 / swipe. Minimum monthly fee $40 for processing less than $2,800/month.

Payleven Cost of reader (£89 or 99€) + 2.75%/transaction

PayMeRussia 2.75% for MasterCard, Maestro and Visa payments

PayTooSwipe n/a

PayPal Here 2.7% transaction fee, with no monthly fee. Non-swipes up to 3.5%, with a $ 0.15 fee

payPLUS n/a

PaySimple $34.95/month and 2.29% + $0.29 / transaction

Punchey .75% + interchange

PocketPOS n/a

QFPay 899 renminbi for the reader and .78%/ transaction

Retail Cloud n/a

RevCOIN 2.55% per transaction or 3.55% +$.15 when card is not present

Revel n/a

Sage Payments n/a

Sales Vu 2.7% in the US and between 1.73% - 3.26% in Canada

ShopKeep $49 for one register and $98 for two registers per month

Softspace n/a

mailto:pay@mobile


Spark Pay

Pro Plan $9.95/month plus 1.95 % for swiped, 2.95 % for American Express transactions. A la carte - 2.7% per swipe and 3.7% for keyed in transactions

Spire/Thyron n/a

Square $275/month or 2.75% per swipe

SumUp 2.75% per transaction

Swiffpay Vary based on country and type of business

Swish HK$498 for reader and 2.99% per transaction

WorldPay £59.99 for reader and 2.75% per transaction

Vantiv n/a

Visa mPOS Taiwan n/a

YES Bank Rs 2,000 and Rs 250-500 per month


The MPOS Report Context

The MPOS Tracker™ organizes the ecosystem into two broad categories: those merchant-facing

organizations who supply devices to merchants directly and those who “power” those players and

supply them with the MPOS hardware, software, tools and services that helps merchant-facing

organizations meet their customer needs. This, we believe, helps to further establish and define the

playing field in what has become a very active space.

What the MPOS Tracker™ is:

The MPOS Tracker™ is designed to offer an organizing framework for evaluting the many players that

have entered the mobile point of sale (MPOS) sector. For the purposes of the Tracker, we will look at all

mobile devices – mobile phones and tablets - and will profile players who enable commerce via either.

Consider the monthly MPOS Tracker™ as our best attempt to give the payments space a “playbook” on

the MPOS ecosystem and how it is evolving – a sort of “who’s on first” perspective of who’s in it, what

their offerings are, and how the market may have evolved month to month. On a quarterly basis, we

will do a “deep dive” into the vendors that play in a specific category.

What the MPOS Tracker™ isn’t:

At least now, this report isn’t a rating or ranking of the players in this space – this feature will be

introduced in Q1 of 2013. It is also probably important to note that we take the information that is

provided to us by the vendors as accurate – we have not done our own due diligence to inform the

placement of the players on the MPOS Pyramid™. We will conduct diligence to support the

rating/ranking feature once introduced.

As we stated in our first report (October 2012), the MPOS ecosystem is moving quickly and this report is

by no means complete – which is why we have chosen to do monthly updates. Further, information

about the players is available in varying degrees of completeness. Details about volumes and shipments

– the information that everyone finds most valuable – is not publicly available. In fact, our big wish is to

publish an aggregate number of MPOS shipments so that we can track how this market moves in more

quantifiable terms. We thank those who have provided us with that information, so far, but would more

so that our report can be complete. We will not publish this information for any individual player but

will only publish an aggregate number on a quarterly basis. If you would like for your numbers to be

added to the total aggregate MPOS Tracker™, please contact us at [email protected].

If you would like to be included in this report and/or would like your information to be updated, please

contact us at [email protected] and we will send you the data sheet required for submission.

Further, if you would if you would like to be included in our ratings and ranking, please indicate this as

well so that we can send along our more detailed questionnaire for you to complete.

Why is MPOS Relevant?

The diffusion of smartphones worldwide has revolutionized the payments industry in a variety of ways.

Mobile phones are being considered (and trialed) in both the retail payments environment and the

acceptance/point of sale environments. “Going mobile” today now means that both customers and

merchants are able to gain tremendous efficiencies at a point of sale that can accommodate the form

mailto:[email protected]

mailto:[email protected]


factors that consumers use today - the plastic card – and move that point of interaction closer to the

customer. Merchants large and small are able to gain business efficiencies as well as new customers and

sales.

Along the way, card readers have been transformed into tiny devices that plug into the headset jacks of

mobile phones and tablets, turning these powerful IP-enabled computing devices into mobile point of

sale terminals- thus the MPOS acronym. But the power goes well beyond card acceptance anywhere, by

anyone. These mobile point of sale devices leverage existing payments functionality and infrastructure

which means that the chicken and egg issues typically associated with new payments entrants don’t

exist. MPOS card readers enable the acceptance of the plastic cards that consumers carry in their wallets

today and like to use.

MPOS may have started life as a way to enable casual sellers and small merchants to accept cards, but it

is quickly moving up the merchant supply chain. MPOS actually started life way back in 2008 – before

Square - in the mobile “field services” space enabling tradespeople and other field service personnel to

deliver their services and generate both an invoice and a payment on site. Square applied this concept

to the micro merchant who was unable to accept anything other than cash or check. Now, Tier One

retailers are turning tablets into cash registers and moving payment and check out to wherever the

consumer happens to be in the store. Clearly, MPOS is reinventing the entire commerce experience for

all types of merchants and consumers.

Quite naturally, given the “perfect storm” of mobile devices, consumers and plastic cards and existing

payments rails, the market has seen an explosion of POS players enter the market. MPOS players can be

divided into two camps: the dozens of players who supply devices to merchants and the universe of

players who “power” those players and provide them with the MPOS hardware, software and enabling

platform functionality needed to meet the needs of their customers. The capabilities of those who

“power” the suppliers range greatly, and as a result, the MPOS offerings in market today exhibit a wide

range of functions from basic payment card acceptance and processing (eg. Groupon Payments) to

enabling a merchant/consumer network (e.g. Square).

organizing the mobile point of sale ecosystem | june 2013 · 2011 to 2012 (from 4.5 million to 9.5...

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