Organizing the Mobile Point of Sale Ecosystem February 2013

Transcription

1 Organizing the Mobile Point of Sale February 2013 A Monthly Update on the State of the Mobile Point of Sale A PYMNTS.com Report Sponsored by ROAM The February 2013 MPOS Tracker If the big takeway in January s report was that value-added was in, the big takeaway in February is that an awful lot of that value is taking the form of bundled solutions that make it easy for merchants to buy. February 2013 s report features nine new players to the MPOS Pyramid, including one powered by supplier. The new merchant facing players are Circle it Up, Cube, Miura Shuttle, MTS, Nedbank, Payfirma, Revel Systems and YES Bank. The one powered by supplier is Payworks. In addition, we ve updated quite a few players from prior months. They include the following eight merchant facing players: izettle, KWI Cloud 9, mpowa, Shopkeep, SumUp, Square, Payleven and PayPal Here, as well as one powered by supplier, ROAM. Key MPOS Insights February This report has added 9 new players to the MPOS Pyramid and offered new insight into the range of players and services entering the space. The big takeaway: Value is taking the form of bundled solutions. Solutions that come bundled with segment appropriate hardware and software make it easy for SMBs to purchase, operate and easy for the services provider to support. Keep it simple. The small business market is time, people and money challenged. Solutions that come bundled with segment appropriate hardware and software make it easy for SMBs to purchase and operate, and easy for the services provider to support. The pricing associated with these bundles are also easy for SMBs to budget for and pay. This trend is seen with both tablet/register solutions and phone/dongle solutions. Distribution is the flip side of stickiness. Payments is a scale business where timely distribution is critical to ignition and ignition is critical to success. Getting to SMBs is a challenge, which is still where the bulk of the MPOS efforts are focused today. Partnerships between players with SMB relationships and MPOS assets extend the reach for the latter while creating additional functionality and stickiness for the former. This two-fer is driving a lot of the partnership activity in the space.

2 Organizing the Mobile Point of Sale February 2013 Standards and best practices rule. At Mobile World Congress, MasterCard and Visa both announced certification programs that provide some best practices and certification standards for MPOS solution providers. These programs are designed to create some minimum standards in important areas like security in an effort to raise the bar for the new players entering the space and provide some assurances to the SMBs who have likely never accepted cards that the solutions they will be using meet a minimum acceptable standard. This space, in particular, will be interesting to watch. The MPOS Organizing Methodology: The MPOS Tracker TM Pyramid The organizing framework for this new ecosystem is the MPOS PYRAMID. It s a graphic representation of where we think merchant facing service providers fit in the market. As stated earlier, it s not designed to suggest that one part of the pyramid is better than another; but rather to depict the characteristics of MPOS solutions. That means that the tip of the MPOS PYRAMID doesn t imply the best it simply implies that the fewest players are concentrated there given the various elements of the service offering that those merchant facing players provide to their merchants. MPOS PYRAMID TM Methodology We have divided the MPOS market into layers representing the broad set of capabilities included in the MPOS service offerings. This, we hope, more easily helps to categorize the MPOS ecosystem by focusing on the capabilities that the various players who serve the merchants in this market offer them. The powered by players are organized on the This monthly MPOS Tracker TM is intended to give the payments space a playbook on MPOS a sort of who s on first perspective of who s in, what their offerings are, and how the market may have shifted month to month. We ll comment on who s moved or entered the space each time we update this report. outside of the MPOS PYRAMID and aligned with the appropriate capabilities that they power inside of the pyramid. Here s how we have used the MPOS PYRAMID to organize the MPOS sector. Core. Players in this quadrant offer the basic hardware/ card reader solutions to merchants that enable mag stripe card acceptance and merchant processing services. Players in this space also have provided some level of security encryption, although the level of security varies by powered-by provider. This is where many players enter the market to establish an MPOS presence and merchant base. Core + Back Office. Players in this quadrant have offerings that provide value-added solutions that enable merchants and other SMBs to perform important back office functions. These functions include tracking/managing inventory, creating invoices, integrating with accounting systems and/or other applications that assist merchants and SMBs in managing their back office. Core + Front Office. Players in this quadrant have offerings that provide value-added solutions that enable merchants and other SMBs to perform important customer-facing functions. These functions

3 Organizing the Mobile Point of Sale February 2013 include loyalty, marketing, CRM and advertising solutions that enable merchants and SMBs to more fully manage support marketing, sales and customer retention activities. Core + Front and Back Office. Players in this quadrant have offerings that provide value-added solutions that enable merchants and other SMBs to support both front and back office functions as described above. Merchant/Consumer Network. Players in this quadrant have offerings that leverage mobile technology to serve both the merchant/smb and consumer. These players provide core + front and back office capabilities along with consumerfacing applications such as wallets. These players use mobile devices and other assets on both the consumer and merchant side to create a network enabled by mobile devices (phones and tablets) and relevant applications. Open Platform/API. Merchant-facing players in this layer are serving merchants directly but have also made a decision to open their hardware/software services to developers via APIs. This is an effort to expand the number of merchants/smb s that they can reach as well as to make it easier for their own solutions to be enriched by other developers who can add functionality to the core offer.

4 Organizing the Mobile Point of Sale February 2013 MPOS Player Profiles New for February 2013 Circle it Up Core When Launched September 2012 Focus Small and Medium Businesses Location India n/a Circle It Up is a strategic brand of Brainy Lions Online Services (P) Ltd, designed to enable quick payments and fund merchants quickly though Android, ios and Blackberry systems. Circle it Up offers flexible pricing such as pay as you go options and without long-term financial commitments or fixed fees. Cube Core + Back When Launched 2012 Customer Focus Small Businesses Geographic Coverage United States 2.5% per swipe or 3.5% per key-in card information or integration into existing merchant account Cube launched to focus on small businesses does not require a long term contract. Cube has daily limits of $5,000 and weekly limit of $30,000 for swiped credit card transactions per swipe and a daily limit of $500 and weekly limit of $3,000 for key-in credit card transactions. The company also offers an Enterprise plan where customers may integrate existing accounts for convent MPOS credit card processing. The system offers employee time tracking, integration with cash drawers and receipt printing. In addition, Cube has created a POS system to offer item inventory control, sales reporting, discounts, multiple tax rules, labor reports, cash management, and modifiers.

5 Organizing the Mobile Point of Sale February 2013 Miura Shuttle Core + Open When Launched February 2013 Customer Focus Small to medium sized businesses Geographic Coverage Global Reach n/a Miura Systems; wholly independently owned and operated company; enables merchants to accept Chip & PIN payments from a mobile device at the point of sale (MPOS). The Miura Shuttle is standard alone MPOS device that connect to ios and Android smartphone and tables via a Bluetooth connection. To complete payment, the shopper needs to insert the PIN code into the device, and the result is then shown on all the devices (Smartphone and Shuttle). Shuttle offers a secure mobile payment solution for retails and shoppers. MTS POS Core When Launched December 2012 Customer Focus Mobile Geographic Coverage India Between Rs.200 Rs.300 per month MTS is a mobile telecom service in India that offers a complete MPOS bundle, smartphone, mpos hardware attachment and a one year data plan, enabling customers to use the solution right out of the box. MTS claims that service is fully secure and the Debit / Credit card details are fully encrypted at the time of transactions and that the MTS mpos is based on PCI DSS standards. The company tested their product with online Indian internet retailers like Flipkart.com and Yebhi.com. Payfirma

6 Organizing the Mobile Point of Sale February 2013 Core + Back Office + Open When Launched June 2011 Focus All sized businesses Location Canada $25 set up fee + $10 monthly fee %-2.92% + $.25 / swipe A minimum monthly fee of $40 is applied to companies that don t process more than $2,800 per month. Payfirma offers MPOS and online transaction payment processing. The MPOS acceptor can turn an ipad into a complete POS system, enabling checkout and item management. Payments can be tracked for cash; checks; debit and credit cards. In addition to mobile and table point-of-sale, Payfirma includes a customer vault, recurring billing, and ecommerce. This ties all payment types in a single account Nedbank's PocketPOS Core When Launched February 2013 Customer Focus Small to medium sized businesses Geographic Coverage South Africa n/a Launched in February 2013 by South African NedBank, this is the first live EMV-certified mobile point-ofsale (POS) solution in South Africa that enables businesses to process debit and credit card transactions by using a smartphone connected to a secure card reader. EMV Chip & PIN technology is mandated in South Africa. The solution was created in the form of two different secure card readers. The first is a small device with a PIN pad that captures an address into the smartphone application and sends a digital receipt to the address to secure the transaction. The other device provides the ability to print out a physical receipt, much like in the case of a traditional POS. Both card reader devices have a secure PIN pad for PIN entry and use Bluetooth technology to connect to the smartphone. The device was created to be used by businesses as a backup device or as a parallel device to reduce queuing time for customers. PocketPOS is targeted to business segments where cash is still the primary method of payment or where they operate 'on the road'. This would typically include delivery, courier and home delivery services, plumbers and electricians, events, concerts and market days as well as taxis.

7 Organizing the Mobile Point of Sale February 2013 Revel Systems Front+ Back office When Launched 2010 Customer Focus Restaurant and Retail establishments Geographic Coverage United States n/a Cash register system that uses an ipad as the POS that stores the information in the cloud. Offers realtime reporting for management and access to the system anywhere. The centralized system enables real-time sales volume and inventory management. Revel is fully PCI Compliant, from the hardware, to the software to the network. Revel was designed to target a variety of markets; the SaaS-based solutions deliver a scalable system for Retail POS, Grocery POS, Restaurant POS, Mobile POS and customer-facing kiosk POS systems. YES Bank Core When Launched December 2012 Customer Focus Merchants targeted to collect payments in homes Geographic Coverage India Rs 2,000 and Rs per month Another MPOS has emerged in India, targeted to merchants that require home delivery services for payment collection specifically high-end corporates, insurance agents, restaurant chains and ecommerce platforms among others offering cash delivery. To collect payment a merchant must have a GPRS enabled mobile phone. YES Bank has partnered with insurance agents and running tests with retailers in the internet space as well as food retailers.

8 Organizing the Mobile Point of Sale February 2013 MPOS Merchant Facing Players February 2013 Updates izettle Core + Open When Launched August 2011 #Customers/volume 50,000 Merchants Customer Focus Small merchants in Europe that don t accept cards Geographic Coverage Sweden, Denmark, Norway, Finland, the UK, Germany, France and Spain 2.75% for MC and Diner s Club or 2.95% for AMEX Update: izettle launched wireless Chip & PIN device, can now take Visa payments. KWI Cloud 9 Core + Back + Front When Launched January 2012 #Customers/volume Implemented in over 500 retail stores, nearly $100 million dollars in sales, over 1.4 million transactions, and 6,000 transactions/day during December 2012 Customer Focus Specialty Stores Geographic Coverage United States n/a Update: Cloud 9 announced that sales have been growing since launch in Over 25 retail brands implemented in over 500 retail stores, nearly $100 million dollars in sales, over 1.4 million transactions, and 6,000 transactions/day during December.

9 Organizing the Mobile Point of Sale February 2013 mpowa Core + Open When Launched June 2012 Customer Focus Banks, Telcos, Large corporations for the open solution and SMBs Geographic Coverage The UK, South Africa, Portugal Linked to existing merchant account.25% or minimum charge $0.40 or 0.25 or Or 2.95% Update: mpowa announced a white-label deal with Portugal Telecom for the carrier to resell mpowa ShopKeep Core + Front + Back Office When Launched 2010 #Customers/volume Targeted 5,000 merchants by end of 2012 Focus Small retailers and quick serve restaurants Location US and Canada $49 for one register and $98 for two registers per month Update: ShopKeep and LivingSocial launched an integrated solution that lets merchants process mobile payments and build loyalty from the POS system. Merchants will be able to take LevelUp s 0% payment processing fees and participate in loyalty programs to retain customers.

10 Organizing the Mobile Point of Sale February 2013 SumUp Core + Network When Launched August 2012 #Customers/volume 10,000s of Merchants Customer Focus Small to midsize companies that don t already have terminals (taxi divers, craftsmen, market traders) Geographic Coverage UK, Ireland, Germany, Austria, Italy, Spain, The Netherlands, France, Belgium, Portugal 2.75% per transaction Update: SumUp now can process American Express payments. The company also announced that SumUp Pay is being developed for launch later in SumUp Pay will let end-users pre-approve a participating merchant though an app and then allow the customers to pay with a confirmation, without needing to take out the phone. Also, SumUp announced that there are several tens of thousands of merchants using the terminals. Square Core + Back+ Network When Launched 2010 #Customers/volume 2 million people using Square 75,000 merchants (July 2012). 6 billion per year Focus Starbucks, SMBs Location US and Canada 2.75% per swipe for Visa, MasterCard, Discover and American Express or $275 per month Update: Square launched Business in a Box package, two Square credit-card readers, a stand and a receipt printer and cash drawer. This package with cost $600 and aims to make accepting payments a complete package to help small businesses start up including enabling them to take cash.

11 Organizing the Mobile Point of Sale February 2013 Payleven Core + Open When Launched June 2012 #Customers/volume 1,000 Merchants in Berlin for trial Focus All merchants Location Germany, The UK, Italy, Brazil, The Netherlands, Poland and Spain 2.75% Update: Payleven is now fully enabled to accept Visa credit and debit cards in the European Countries in which it operates. With the Chip & PIN technology, Payleven can accept all Visa and V-pay branded cards. PayPal Here Core + Network When Launched March 2012 #Customers/volume 200,000 Merchants Customer Focus All areas of business, merchants Geographic Coverage US, Canada, Japan, Hong Kong, Australia and UK 2.7% transaction fee, with no monthly fee. The fee for non-swipes goes up to 3.5%, with a $ 0.15 fee Update: PayPal here is now in the UK, the second biggest PayPal market outside of the US, with some 18 million active users.

12 Organizing the Mobile Point of Sale February 2013 MPOS Suppliers New for February 2013 Payworks Payworks was founded in 2012 and is funded by the Central Innovation Program for SMEs of Germany s Federal Minstry of Economics and Technology. Payworks provides a turnkey white-label product to facilitate the rollout of complete payment acceptance. The company works to facilitate e-commerce and POS transactions. The company provides SDKs (including hardware integration) and white label mpos solutions for a wide range of payment applications Payworks has partnered with leading payment processing companies and acquiring banks across the globe. Over 80 providers have connected to the Payworks platform. The MPOS can accept payments from Visa, MasterCard, American Express, Diners Club, JCB and China UnionPay. Payworks worked with Austrian Payment Service provider, PayUnity, to allow small and medium retailers to easily accept card payments at Oktoberfest in MPOS Suppliers Updated for February 2013 ROAM In February, ROAM announced the launch of a Professional Services Group that will focus on streamlining the different factors of mobile technology into existing payments infrastructure that customers use. Also in February, Visa announced a partnership with ROAM, which should help to bring Visa s new Visa Ready platform to more merchants and acquirers. ROAM becomes Visa s first mpayments partner for the Ready platform, and those already using ROAM swipe-and-dongle devices have access to Visa s API too. Click here to listen to a podcast with MPD CEO Karen Webster, ROAM CEO Ken Paull and Visa's Global Head of Business Development Matt Dill as they discuss this new partnership.

13 Organizing the Mobile Point of Sale February 2013 Appendix The MPOS Report Context The MPOS Tracker organizes the ecosystem into two broad categories: those merchant-facing organizations who supply devices to merchants directly and those who power those players and supply them with the MPOS hardware, software, tools and services that helps merchant-facing organizations meet their customer needs. This, we believe, helps to further establish and define the playing field in what has become a very active space. What the MPOS Tracker is: The MPOS Tracker is designed to offer an organizing framework for evaluting the many players that have entered the mobile point of sale (MPOS) sector. For the purposes of the Tracker, we will look at all mobile devices mobile phones and tablets - and will profile players who enable commerce via either. Consider the monthly MPOS Tracker as our best attempt to give the payments space a playbook on the MPOS ecosystem and how it is evolving a sort of who s on first perspective of who s in it, what their offerings are, and how the market may have evolved month to month. On a quarterly basis, we will do a deep dive into the vendors that play in a specific category. What the MPOS Tracker isn t: At least now, this report isn t a rating or ranking of the players in this space this feature will be introduced in Q1 of It is also probably important to note that we take the information that is provided to us by the vendors as accurate we have not done our own due diligence to inform the

14 Organizing the Mobile Point of Sale February 2013 placement of the players on the MPOS Pyramid. We will conduct diligence to support the rating/ranking feature once introduced. As we stated in our first report (October 2012), the MPOS ecosystem is moving quickly and this report is by no means complete which is why we have chosen to do monthly updates. Further, information about the players is available in varying degrees of completeness. Details about volumes and shipments the information that everyone finds most valuable is not publicly available. In fact, our big wish is to publish an aggregate number of MPOS shipments so that we can track how this market moves in more quantifiable terms. We thank those who have provided us with that information, so far, but would more so that our report can be complete. We will not publish this information for any individual player but will only publish an aggregate number on a quarterly basis. If you would like for your numbers to be added to the total aggregate MPOS Tracker, please contact us at mobilepos@pymnts.com. If you would like to be included in this report and/or would like your information to be updated, please contact us at mobilepos@pymnts.com and we will send you the data sheet required for submission. Further, if you would if you would like to be included in our ratings and ranking, please indicate this as well so that we can send along our more detailed questionnaire for you to complete. Why is MPOS Relevant? The diffusion of smartphones worldwide has revolutionized the payments industry in a variety of ways. Mobile phones are being considered (and trialed) in both the retail payments environment and the acceptance/point of sale environments. Going mobile today now means that both customers and merchants are able to gain tremendous efficiencies at a point of sale that can accommodate the form factors that consumers use today - the plastic card and move that point of interaction closer to the customer. Merchants large and small are able to gain business efficiencies as well as new customers and sales. Along the way, card readers have been transformed into tiny devices that plug into the headset jacks of mobile phones and tablets, turning these powerful IP-enabled computing devices into mobile point of sale terminals- thus the MPOS acronym. But the power goes well beyond card acceptance anywhere, by anyone. These mobile point of sale devices leverage existing payments functionality and infrastructure which means that the chicken and egg issues typically associated with new payments entrants don t exist. MPOS card readers enable the acceptance of the plastic cards that consumers carry in their wallets today and like to use. MPOS may have started life as a way to enable casual sellers and small merchants to accept cards, but it is quickly moving up the merchant supply chain. MPOS actually started life way back in 2008 before Square - in the mobile field services space enabling tradespeople and other field service personnel to deliver their services and generate both an invoice and a payment on site. Square applied this concept to the micro merchant who was unable to accept anything other than cash or check. Now, Tier One retailers are turning tablets into cash registers and moving payment and check out to wherever the

15 Organizing the Mobile Point of Sale February 2013 consumer happens to be in the store. Clearly, MPOS is reinventing the entire commerce experience for all types of merchants and consumers. Quite naturally, given the perfect storm of mobile devices, consumers and plastic cards and existing payments rails, the market has seen an explosion of POS players enter the market. MPOS players can be divided into two camps: the dozens of players who supply devices to merchants and the universe of players who power those players and provide them with the MPOS hardware, software and enabling platform functionality needed to meet the needs of their customers. The capabilities of those who power the suppliers range greatly, and as a result, the MPOS offerings in market today exhibit a wide range of functions from basic payment card acceptance and processing (eg. Groupon Payments) to enabling a merchant/consumer network (e.g. Square).