The rise of mobile point of sale technology has reshaped the merchant acquiring landscape, creating new opportunities for businesses of all sizes to accept electronic payments. What began as a disruptive concept quickly evolved into a competitive battleground as payment processors, independent sales organizations, and merchant acquirers raced to develop their own mobile acceptance solutions. The appeal was obvious: millions of small businesses and individuals that had previously operated outside the traditional card acceptance ecosystem suddenly had access to affordable payment tools powered by smartphones.
As adoption accelerated, however, the market became increasingly crowded. Success in the mobile point of sale sector would require more than simply matching the features of early innovators. Providers needed differentiated offerings, targeted market strategies, and a clear understanding of merchant needs to stand out in an environment where competition was intensifying and new entrants were emerging at a rapid pace.
Coming out of the ETA Annual Meeting and Expolast week in San Diego, I was left with the impression (as many inthe analyst community and industry press have also noted) thatmerchant acquirers and service providers have gone mobile. That is,they have solutions for mobile merchants or really any “merchant”who wishes to accept payments using his smartphone and a relativelyinexpensive add-on card reader.
As anyone who’s uttered the word “payments” over the last year,year-and-a-half surely knows, there’s been some discussion aboutthis.
Mercator published a report coming out of last year’s ETA focusing on the vendorsector of the mobile POS space, and the various Squares and Sledshad just begun offering ISOs and acquirers for white-labeling anddistribution.
Well, it seems the distribution has begun in a big way.
Not to be outdone by the disruptive player in the room(ahem…Square), a slew of major acquirers, ISOs, and others havedeveloped their own solutions to address what is potentially a veryattractive market.
But many of these solutions are reactive to Square and constitutemerely defensive plays. Very few of this crop of mobile POSmerchant providers are thinking creatively in a rigorous way. Sure,a 20 million merchant market opening up may lead anyone to think”how can we go wrong?” But without a plan for niche segmentationand targeted solutions, competition for the general populace ofpotential card acceptors via smartphone could be quite bloodyindeed.
In the ISO business, competition is fierce. Intelligence about whatyour competitors are doing is essential for success. Lack ofdifferentiation in new products just transliterates the same issuesto a new market.
The rapid growth of mobile point of sale solutions highlighted both the opportunities and challenges facing merchant acquirers. While the addressable market appeared enormous, long-term success depended on more than simply offering a card reader and mobile app. Providers needed to identify specific merchant segments, develop unique value propositions, and create solutions tailored to distinct business needs.
As the payments industry continues to evolve, the lessons from the early mobile point of sale market remain relevant. Innovation alone is rarely enough to guarantee success. Sustainable growth comes from combining technology with thoughtful market strategy, competitive differentiation, and a deep understanding of how merchants want to accept payments and serve their customers.
