Mobile Credit Card Readers Accelerate Payment Revolution

Traditionally cash-only businesses such as taxi drivers and street vendors are quietly adopting mobile credit card payments, with a recent BIA/Kelsey survey finding that 40 percent of small- and medium-sized businesses now accept point of sale payments with a mobile credit card reader attached to an iOS or Android smartphone or tablet. Northwestern University professor Robert Wolcott says the mobile payments trend is ramping up as consumers and businesses demand greater flexibility, and banks will eventually be forced to change their business model to accommodate more payment options. “The impact over time will be to vastly expand the number of ways people can pay each other,” Wolcott says. “It also creates more choice regarding the technology platforms on which businesses and consumers can move money.” He notes that small- and medium-sized vendors are learning that mobile readers are helping to stoke sales, while payment system providers such as Square are expanding through word-of-mouth and special offers, such as giving out readers for free. “Traditionally there have been very few of the platform providers and they are able to command a lucrative fee from all transactions,” Wolcott says. “Square’s decision to give away readers is right if their objective is to try to reach scale and make inroads against the traditional payments providers.”

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From “Mobile Credit Card Readers Accelerate Payment Revolution”
Medill Reports (08/28/13) Sheng, Xin