The concept of a small business using a tiny—and free—device that can read and process credit cards using only an Internet connection is revolutionizing the way companies can accept purchases, and more merchants are adopting the technology all the time.
Small businesses across the country are adopting a new type of technology that turns any portable, Internet-enabled device into a credit card reader, and perhaps making their companies more profitable in the process, according to a report from the Minneapolis Star Tribune. These mobile credit card readers have surged in popularity since the start of 2011, with the total value of transactions processed on them climbing to $86.1 billion last year, up more than 50 percent from 2010.
[Article: Erply Enters Mobile Card Readers Market]
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“They’re extending the existing system to potentially millions of very small merchants—piano teachers, plumbers, electricians … somebody who in the past would take cash or check,” Eric Grover, a payments consultant with Intrepid Ventures, told the newspaper.
The company best known for bringing mobile credit card technology to small businesses is tech startup Square, which was founded by former Twitter executive Jack Dorsey, the report said. Currently, Square has more than 1 million users nationwide and processed more than $2 billion in transactions last year. Typically, Square makes their card reader available to merchants free of charge when sent by the company directly, or for a small fee when purchased through a third party, but in the latter case, the money is recouped in the form of an account credit. Square, and device manufacturers like it, make their money by charging a small fee for every transaction processed.
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Currently, data from the Nilson Report suggests there are about 20 million small businesses in the U.S. that do not accept debit or credit card purchases, and that’s what these device issuers hope to tackle next, the report said.
It’s expected that the mobile credit card payment industry, which includes transactions such as these as well as those made with “mobile wallet” smartphone systems that utilize near-field communications, could be worth as much as tens of billions of dollars annually within the next few years. However, the major hurdle to adoption is currently believed to be consumer acceptance of the security of these transactions.
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