Europe may be poised for a pricing war among the various companies there providing mobile payment card acceptance. Where most of the players in the market charge merchants a flat 2.75% of the sale, iZettle has announced a new rate structure that could push the merchant cost down to 1.5% with sufficient transaction volume.
From TechCrunch.com:
iZettle is keeping the 2.75% per transaction as its ceiling but once a small businesses takes more than £2,000 per month the fee starts dropping, bottoming out at 1.5%. iZettle is doing the rate reduction calculations itself, and to keep things simple. Jens Münch, iZettle United Kingdom managing director, said it will be charging 2.75% on all transactions during the month and then doing an end of month reckoning. Businesses that exceed the £2,000 sales threshold will receive cash back, based on the reduced rate associated with their total monthly sales.
“The 2.75% [rate] is a hangover from the U.S.,” Münch tells TechCrunch. “Square essentially said 2.75% because of U.S. cost structure, which is quite different from Europe, and that was brought over [by European mobile payment startups]. So we knew that at some point that was going to be challenged.”
Competition appears to have taken hold in the UK mobile point-of-sale space, as market saturation is leading to competition based on price. As Münch suggested, Europe is not as familiar with the relatively high cost of merchant card acceptance Square brought to the market, so time will now tell how far down competitors in the region’s mPOS market will push merchant prices. As prices fall, users of mPOS services surely will rise, and card issuers and networks will reap the benefits of the added sales and transaction volume.
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