Measuring up Mobile Payments Providers

Measuring up Mobile Payments Providers


Over the past few years I’ve done a good deal of comparing the offerings of the various Square-like mobile payments services against each other and mostly against the original. I think I’ve spent more time on the Square – Intuit GoPayment comparison than I have on any other, probably because early on Intuit was Square’s biggest challenger and that didn’t change until PayPal Here showed up, which only happened in March of last year. Of course, since then I’ve done several Square – PayPal Here comparisons and have concluded that the two services stack up pretty closely against one another.


One thing I haven’t done is a wholesale evaluation of all major mobile payments processors for comparative purposes. In fact, that thought has never really crossed my mind, probably because it seems as if every week there is a new entrant into a field that was already crowded at the time PayPal entered it more than a year ago and I was always curious to see if the newcomer had anything, well, new to offer (usually they did not). Still, I should have done it at least once, but I didn’t. Well, this morning I noticed that the good guys over at NerdWallet have stepped in and filled the gap, saving me a lot of work in the process. So let’s see what they have found.

Stacking up Mobile Payments Processors


NerdWallet has compared the various mobile payments offerings of seven U.S. processors, with the aim of achieving the modest objective of finding “the best mobile payment reader for any business”. And they have concluded that “unless you’re doing over $15,000 in monthly sales, your best option is probably a payment processor you haven’t heard of”. And yet, even as the authors admonish us not to “just go for the big names”, they promptly proceed to present the gist of their findings, where we see… only big names. Here it is:

  • LevelUp is best for merchants that accept American Express or process smaller transactions
  • Breadcrumb from Groupon is best for merchants whose average transaction is over $75
  • Square is best for merchants who:
    • Do five or six digits in sales each month
    • Have few transactions over $400
    • Key in very few transactions


Here is a more detailed presentation:

If your monthly sales are…

And…

We recommend…

$13,750 or less

You accept American Express or your average transaction is under $75

LevelUp

You don’t accept American Express and your average transaction is over $75

Breadcrumb

$13,750-$916,667

Most of your transactions are under $400 AND you do very few key-in transactions

Square’s $275/mo program

Many of your transactions are keyed in or over $400

LevelUp

$916,667

You accept American Express or your average transaction is under $75

LevelUp

You don’t accept American Express and your average transaction is over $75

Breadcrumb


The reason why American Express is singled out in this chart is that the New York-based credit card company charges significantly higher processing fees than its rivals — Visa, MasterCard and Discover. And the reason why LevelUp and Square rank better than the competition for merchants accepting American Express is that the two processors charge the same rates for all credit cards, choosing to subsidize the cost of processing AmEx transactions for the sake of keeping their rate structures simple. The strategy seems to be working well for both companies.


Then the authors have the following to say about Dwolla, whose service we have evaluated, to much controversy, on several occasions:

Dwolla can be one of the best payment processors out there, charging nothing for transactions under $10 and just $0.25 per transaction over $10. But there’s a catch: it requires customers to have a Dwolla account linked to their bank account. Asking customers to sign up at the point of sale creates unnecessary friction. Dwolla is a good supplement: great if your customers are already signed up, but a hassle otherwise.

  • If the total volume of transactions over $10 exceeds $1,100 a month, however, Square’s $275 per month plan is ideal.


Well, there is a rather glaring omission from this statement: Dwolla is not a credit card processor — its payments are funded from its users’ bank accounts. So comparing it to Square must be the ultimate apples-to-oranges payment processing comparison.

Comparing Payment Plans


NerdWallet has done a nice job in summarizing the details of the examined processors’ payment plans in the following table:

Processor

Non-AmEx fee

AmEx fee

Keyed-in transactions

Monthly fee

Breadcrumb by Groupon

1.8% + $0.15

2.3%-3.5%+$0-$0.15

2.3% + $0.15

$0

PayPal Here

2.7%

2.7%

3.5% + $0.15

$0

SumUp

2.75%* only accept Visa and MasterCard

2.75%

$0

Intuit GoPayment*

2.7% (qualified) 3.7% + $0.15 (non-qualified)

2.89%-3.5% + $0.10-$0.15

3.7% + $0.15

$0

Intuit GoPayment** (subscription)

1.7% (qualified) 3.7% (non-qualified)

2.89%-3.5% + $0.10-$0.15

2.7%

$12.95

Bank of America Mobile Pay on Demand

2.7%

2.30% to 3.50%, plus $0.00-$0.15

3.5% + $0.15

$0

Square

2.75%

2.75%

3.5% + $0.15

$0

Square (subscription)

0% 2.75% on transactions over $400 or volume over $250,000

3.5% + $0.15

$0

LevelUp

2%

2%

2%

$0


*Qualified transactions include only debit and non-rewards credit cards; keyed-in transactions and most corporate, foreign and rewards credit cards are charged the non-qualified rate.

**With the subscription pricing, keyed-in transactions have a lower rate. Otherwise, the designations for qualified and non-qualified are the same.

The Takeaway


It is important to emphasize that NerdWallet’s comparison is limited to the seven processors’ pricing structures and so it excludes things like payout schedule, service reliability, availability and quality of transaction reporting and add-on services, customer support quality, etc. And these, as applicants for our own service keep telling us, are all incredibly important factors in merchants’ decision-making process, especially when it comes to experienced businesses, the type we are dealing with.


Image credit: LevelUp.

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