This week, I’d like to welcome a guest writer – Eric Stauffer. He is a mobile payments expert and small business advocate. His firm reviews products like PayPal Here and GoPayment, and they help small business owners find the best payment solutions for their needs.
Last month, PayPal announced their entrance into the mobile credit card acceptance game when they introduced PayPal Here, a direct competitor of the already established Square and GoPayment platforms. By leveraging PayPal’s current feature rich payment systems, they promise to provide a wider array of services that will be beneficial to small business owners who need to capture payment across various channels.
The [Short] History of Mobile Credit Card Processing
Close to 18 months ago, the co-founder of Twitter, Jack Dorsey, introduced a new product that promised to revolutionize the payments world. It was called Square, and it allowed an individual to process a credit card transaction right on their smartphone using a small attachment that plugged into the headphone jack. The original idea was geared towards individuals as a way to ‘square up’ with each other using credit cards, however, it quickly became apparent that the real benefactor of this new device was small businesses.
As Square began to take off in the business world, other companies took notice and quickly put together their own version. One of the most successful of these competitors was called GoPayment, a spin off from Intuit (the makers of Quicken and TurboTax). With large marketing dollars and cross-selling opportunities, Intuit was able to capture a lot of customers in a short period of time. They tailored their program to fit the needs of small businesses a little bit better than Square, and have become a favorite in this sector.
PayPal Here vs the Rest of the Field
At first glance, PayPal Here looks to be just another mobile processing product. But when you get down into the details of what it can offer over its competitors, it becomes clear that certain business owners can see a benefit of going with PayPal.
First, most transaction dollars will be available immediately in an attached PayPal account without any hold time. This is beneficial for merchants that already use PayPal for purchasing and expenses. Second, businesses can attach their funds to a debit card and receive a 1% cash back reward on all purchases. That effectively reduces the overall transaction cost below that of Square and Go Payment. Third, businesses that are already setup to accept PayPal through their website will be able to handle both types of expenses through one account.
Perhaps the biggest benefit business owners will see over Square and GoPayment is the ability to accept electronic checks as well as send or create digital invoices directly from the smartphone app. While these services are already available for many PayPal customers, it will tie these features together and present them under one roof on the mobile app and the web interface.
Which Service is Best?
While each of the three services are similar in nature, they do each have their own benefits that favor particular users.
Square – Individuals and businesses doing very limited transactions in small increments. On numerous occasions Square has placed holds on random large transactions and provide limited information as to when the funds will be ready. This does not bode well for businesses relying on transaction income for their operating costs.
GoPayment – Small to large businesses looking to transact on a frequent basis. GoPayment is much more forthcoming with their hold information and provide 800 support lines for business owners, something Square does not do.
PayPal Here – Since PayPal Here has not officially launched, it is difficult to know exactly who will benefit the most from their services. It is assumed that businesses already using PayPal and want to expand into mobile payments will probably see the biggest benefit, since it will all work together seamlessly.