Offering mobile POS systems for small businesses can represent a big opportunity for credit unions, according to a March 2012 survey by Phoenix Marketing International.
The report showed 30% of surveyed small businesses with less than $1 million in annual sales would like to use smartphones or tablets to receive and process debit or credit card payments.
“Mobile payments platforms are more than just a credit card reader that plugs into mobile devices; they can be a lifeline for small businesses and a source of revenue for credit unions,” said David Keenan, general manager of Network Solutions at Fiserv, which began offering its mobile POS solution SpotPay to credit unions in the fourth quarter of 2012.
For some small business owners, being able to accept payments almost anytime, anywhere is becoming a necessity.
“Mobile payment adoption is being driven by people like retailers at farmer’s markets, artists at festivals, food truck owners, taxi drivers and other small business owners whose sales aren’t big enough to justify the expense and complexity of accepting traditional card payments,” Keenan added.
The popularity of Smartphones has spurred growth in mobile payments and that trend is expected to continue.
“Now that almost everyone has a smartphone that can accept and initiate payments, there’s no telling how much growth we’ll see in mobile payments,” Keenan added. “We haven't even scratched the surface of what anywhere, anytime commerce means.”
SpotPay’s secure card readers work with iOS and Android mobile devices. Users are charged $8.95 per month and 1.99% per swipe for most transactions; American Express direct charges are excluded.
Non-qualified transactions such as loyalty, rewards, corporate card transactions are billed at 3.19% of transaction. Voice Authorization transactions are billed at 3.19% of transaction plus $3.95.
Read more: Centra Credit Union launches SpotPay ...
Member demand drove the decision to launch SpotPay last fall at Centra Credit Union, said Nan Morrow, director of marketing, branch sales and brand image for the $1.2 billion co-op in Columbus, Ind.
Members had seen advertisements for Square and were asking if the credit union was going to offer something similar available, Morrow said.
"We are very excited to be able to offer SpotPay to our members who own small businesses,” she said. “We want to provide the services our business members need to help their organization grow."
At Centra, rates of adoption have been somewhat slower than anticipated, but the product is receiving good reviews from members who have tried it, Morrow said.
“We've had six businesses add SpotPay as a form of payment acceptance in the past couple of months,” she added. “They really appreciate having the service because it does expand the capability of small businesses.
Karl Kissinger, vice president of business services at Centra, agreed, adding: “The ability to pay anyone, anytime, anywhere is revolutionizing commerce as we know it. We’re pleased that Centra Credit Union is a part of this revolution. SpotPay is an innovative tool that helps deliver anytime, anywhere commerce while deepening our relationships with our business members.”
Read more: Square vs. SpotPay ...
San Francisco-based Square, founded in 2009, had a big headstart in the mobile POS race and has unveiled new features on a regular basis.
Square recently announced an integration between Square and Intuit QuickBooks, which enables small businesses to more efficiently import transactions, streamline operations, save time and ensure accurate reporting, the company said.
“Square is focused on helping businesses grow,” said Francoise Brougher, business lead at Square. “Our customers tell us often how important it is to have accurate and in-depth information about their business. Integrating with QuickBooks gives sellers another powerful tool to help them run their business more efficiently.”
One key difference between Square and SpotPay is that credit unions can offer SpotPay to their members from a co-branded format and can share in the interchange income, Keenan said.
“Branding is critical for credit unions, so it is built into SpotPay so that the member sees their credit union logo as a reminder of who is providing this valuable service,” he added.
SpotPay is the only mobile payments product currently offered through financial institutions and will soon feature remote-deposit capture of checks, and for ACCEL/Exchange members, real-time funds availability and account transfers, he said.
“The costs of taking card payments used to be a big barrier to running your own business, but SpotPay is eliminating that problem,” Keenan said.
While he would not reveal an exact number of credit unions using the service or the amount of revenue that can be generated by credit unions, Keenan said hundreds of financial institutions are offering SpotPay.
“The specifics of our revenue sharing plan are proprietary, but it’s definitely enough to be meaningful for credit union partners,” he added.
In addition to signing up at credit unions that offer SpotPay, small business owners can also sign up through the SpotPay website to be enrolled with their existing credit union. If the members credit union doesn’t offer the service, the user will be enrolled directly until it does.
“Small business owners seem to prefer to adopt financial institution-centric solutions if those options are available, so the hundreds of financial institutions that have signed up to offer SpotPay are seeing steady rates of adoption,” Keenan added. “If a business owner that belongs to a credit union is looking for a mobile payments solution and SpotPay is available at the credit union, the chances are good that the business owner will opt to use the platform offered by the credit union because that’s where their business and personal financial accounts are already managed.”