The mobile payment industry has grown quite crowded in the last few years as more companies, both large and small, see the inherent value in offering independent businesses an alternative to the current transaction processing system.
Bank of America is the latest such company to roll out this kind of mobile payment processing platform, the financial institution recently announced. The program, known as Mobile Pay on Demand, allows small businesses to accept credit and debit card purchases in much the same way its competitors do: through a pairing of a card-reading device that plugs directly into a smartphone or tablet, and a dedicated application.
Mobile Pay on Demand works with any Visa, MasterCard, Discover or American Express card, but comes with three tiers of service for participating companies, the report said. The first is the simplest, which is designed for companies that don’t process many transactions, the value for which is usually less than $2,000 per purchase. Businesses can only use the associated account on one device, but will face no monthly fees.
The other two tiers are designed for larger companies, and do come with monthly fees, the report said. However, these are designed for businesses that process many transactions, of any value, and have multiple devices tied to one Mobile Pay on Demand Account. Those in the lower business tier will be able to use any Android or iOS mobile devices, while the higher one will rely on a dedicated but portable point-of-sale card reader, which allows for far quicker processing of transactions.
The swipe fees for Visa, MasterCard and Discover accounts through the platform will be 2.7 percent of the total transaction value when swiped, or 3.5 percent plus 15 cents when entered manually, the report said. For American Express accounts, fees can range from 2.3 to 3.5 percent, plus between 0 and 15 cents, depending upon the specific type of card. Bank of America is so sure these rates are the best in the business that it will pay $500 to any company that can find a better one.
Mobile payment processing may be the wave of the future for small businesses, which are often overburdened by the swipe fees charged by traditional companies in this industry. Experts say even small companies can pay tens of thousands per year as a result of these costs, which will significantly eat into their bottom lines.
Image: Bank of America