New SpotPay mobile card reader takes swipe at competition

New SpotPay mobile card reader takes swipe at competition

Is there room in the crowded market for yet another mobile payment solution? Financial services technology provider Fiserv thinks so. The company is positioning its newly-introduced SpotPay mobile card reader as the first designed specifically for financial institutions to offer to their small business customers.

In other words, instead of turning to mobile payment products offered by PayPal or start-ups like Square, Fiserv is hoping that merchants will turn to their own banks to get SpotPay.

"Financial institutions are an integral part of this revolution, as they are in a unique and trusted position to ensure the safety and security of [mobile] transactions," David Keenan, general manager of Network Solutions at Fiserv, said in a press release.

Like Square, PayPal Here and other mobile card readers, SpotPay plugs into smartphones and tablet PCs, allowing merchants to process card payments without a register. Although Fiserv realizes that there are already many mobile payment systems available, it developed the SpotPay technology in response to requests from its financial institution clients, says Julie Nixon, senior public relations manager at Fiserv. 

"We have good relationships with our 16,000 financial institution customers, and we wanted to provide them with a service that they could offer to their merchant clients to deepen their relationship with those small business clients," Nixon says.

To get SpotPay for their merchant customers, banks and credit unions must be part of ACCEL/Exchange, a payment network of financial institutions and retailers that is owned and operated by Fiserv EFT, a division of Fiserv. SpotPay, Keenan told Merchant Account Guide, will add another incentive for financial institutions to join ACCEL/Exchange.

"SpotPay adds to the reasons why forward-looking financial institutions choose ACCEL/Exchange," Keenan says.

The fact that SpotPay is tied to ACCEL/Exchange's infrastructure, Keenan says, gives it advantages for merchants that competitors don't -- particularly "better functionality" when it comes to accepting checks.

By using the remote deposit capture feature, merchants can take a picture of the front and the back of a check and deposit it electronically. And, unlike with competing products, checks are authorized and cleared in real-time, Keenan says, using the existing ACCEL/Exchange check clearing and authorization interface.

Square, meanwhile, does not allow check payments. And, while PayPal Here does, funds don't go straight to the merchant's bank account. They must be transferred from a PayPal account -- which can create complications if PayPal freezes funds due to suspected fraud.

SpotPay's pricing model is a hybrid of a monthly fee ($8.95) and a relatively low per-transaction fee --1.99 percent for most swiped transaction (the number may vary by card network). How price effective that is depends on the size of the business. Keenan says SpotPay's pricing is "superior" for merchants with more than $700 in monthly card payments. For comparison, PayPal Here charges 2.7 percent per swipe, while Square offers merchants a choice between a 2.75 percent swipe fee or a $275 monthly fee.

SpotPay does not yet have a mobile wallet or payment app that would allow customers to pay with their phones instead of cards. Yet Keenan says an app is already in the works.

For merchants concerned with card security, Fiserv says that SpotPay surpasses PCI DSS requirements and has strong fraud prevention tools that make card transactions easy to accept with security designed to decline counterfeit cards.

If SpotPay thrives, it will be feeding an existing hunger among small merchants for mobile payment options. Thirty percent of small businesses with under $1 million in annual sales indicated that they would like to use their smartphones or tablets to receive and process debit or credit card payments from their customers if the service were available, according to a March 2012 survey conducted by Phoenix Marketing International for Fiserv. 

See related: Google Wallet makeover leaves merchants with yet another choice to make, Will consumers reject mobile payments

Published: September 13,2023