Clip On, Clip Off? Merchants Weigh Mobile Card Reader Form Factors

by Bailey Reutzel

Mobile point of sale devices typically clip onto phones to allow the handsets to read card payments, but this approach is not the only option.

Particularly for mobile card readers built to accept EMV-chip cards, some devices come as standalone readers with a built-in PIN pad. These types of devices communicate with a merchant’s phone wirelessly, but merchants might not see this form factor as a convenience.

“There appears to be a strong preference by most merchants to go to a physically connected device,” says Erik Vlugt, vice president of product marketing at VeriFone. “In a typical integrated payment environment [merchants] prefer a single device so they don’t have to keep track of two devices.”

The clip-on devices typically follow the example set by Square, which offers a card reader that plugs into the phone’s headphone jack and uses the phone’s screen as a customer interface. The standalone model typically adds features such as a PIN pad, which at first was too bulky to attach to a typical smartphone.

VeriFone manufacturers EMV-compatible connected card readers as well as separate handheld PIN pads that link to the merchant’s mobile phone through Bluetooth.

The smaller market for separate EMV readers is focused on highly consultative sales environments, says Vlugt. For example, home design consultants spend an extended time interacting with customers but receive payment only at the end of the process, making them more likely to choose a mobile card reader that does not attach to a phone, he says.

But “as these devices get smaller and smaller over time, it’ll probably trend more towards the single physically connected device,” Vlugt says.

Payleven, which offers a standalone EMV card reader that uses Bluetooth to communicate to the user’s phone, says this product is popular among European merchants and consumers “due to trust issues,” says Alston Zecha, founder and chief operating officer at payleven. “European consumers often do feel uncomfortable if the payment device is directly connected to a phone.  Since the introduction of the Chip & PIN Bluetooth card reader, our business alone as grown more than ten times.”

Ingenico’s mobile point of sale unit, ROAM, has been diversifying its product set instead of sticking with a one-size-fits-all model.

The vendor is seeing not only micromerchants adopting mobile payments but also larger businesses picking up the technology, and these companies require vastly different products, says Rod Hometh, Ingenico’s vice president of market development.

Ingenico also sees more merchants choosing attached devices. But merchant preferences also have to do with familiarity, Hometh says. The clip-on plugins have been in the market for at least four years, he says, whereas the newer non-attached devices haven’t had as much time to proliferate.

Separate devices “are generally a bit more sophisticated devices…and the investment in terms of technology and money is a bit greater than with a plugin device,” says Hometh.

Mobile point of sale devices are quickly becoming mainstream as their interfaces become more intuitive, he says.

Especially as U.S. merchants near the October 2015 deadline for accepting EMV cards, they are updating their point of sale systems to accept chip-cards and at the same time upgrading to a mobile system.

“We’re in a period of due diligence by the merchant community and once the dates and timeframe and implementation path becomes more clear we’ll see a pretty significant increase in the use of [EMV capable mobile point of sale systems],” Hometh says.

But while there’s a push to put tablets and smartphones in store associates’ hands so they can check out customers in aisles, Hometh says, “Integrating mobile devices has been challenging for many retailers because it takes them out of their comfort zone in terms of security…and this also brings up a host of other logistical issues about how merchants can do that in a store that wasn’t built for that.”

There is already tremendous interest in using a tablet or other smart device to manage the business through cloud-based services but also having a more conventional terminal for accepting EMV payments, he says.

But a merchant’s choice of mobile point of sale hardware isn’t all based upon the product design, says Xavier Giandominici, director of Fime America.

“We are seeing merchants focusing on the processing contract that comes with the product package as the real driver for the adoption of a particular solution,” he says. Square and Intuit, for example, “offer merchants a full solution to process the transaction with simple pricing models, no monthly fees and no commitments. Deals like this are proving to be very appealing to merchants.”