organizing the mobile point of sale ecosystem | march 2013 · the mpos organizing methodology: ......

Organizing the Mobile Point of Sale Ecosystem | March 2013 Ecosystem Analysis

This report has added 5 new players to

the MPOS Pyramid™ and offered new

insight into the range of players and

services entering the space.

The big takeaway: MPOS is enabling the

capture of a very critical asset sought by

merchants large and small - data. If you

want to know why large retailers are

making such large investments in MPOS –

that is certainly one of the big reasons.

.

The March 2013 MPOS Tracker™

While the big takeaway in February’s report was that a tremendous amount of value was being driven

by bundled solutions, in March we will learn that MPOS is helping to solve a very important “data”

problem that physical merchants have today. That problem? Unlike online merchants that capture

customer name, email and billing/shipping adress, most physical merchants don’t know what customers

are in their stores. The absence of that data means that

they have a very limited ability to interact with that

customer before, during and sometimes even after the

checkout process unless they ask customers to fill out

“customer cards” - which few customers actually do and

even fewer merchants ask customers to do. MPOS

solutions, even at their most basic level, enable

merchants to capture (and even organize) basic

customer contact information. Tablet-based MPOS

solutions that literally put commerce into the hands of

sales associates means that they can engage with

customers, provide an even richer opportunity to link

purchasing intent, preferences and habits with a

customer profile and secure a client relationship. If you

are wondering why so many large merchants are

spending the money to put MPOS solutions in the hands

of their sales associates, this is certainly one of the big reasons that they are wiling to belly up to the

MPOS bar.

March 2013’s report features 5 new players to the MPOS Pyramid. The new merchant facing players are

Blue Bamboo, Flint, SofSpace, SpirePayments (Thyron), and PaySimple. In addition, we’ve updated 6

players from prior months. They include the following merchant facing players: Adyen Shuttle, Intuit,

NCR Silver, PayPal, Payleven and Sales Vu.

A Monthly Update on the State of the Mobile Point of Sale

Ecosystem

A PYMNTS.com Report Sponsored by ROAM


Key MPOS Insights | March

As goes new payments channels, so goes concerns with the security of cardholder data. The

increasing popularity of MPOS solutions, especially with new card accepting small/micro-merchants,

has increased the decibel level over the need to protect cardholder data. March 2013 was the

month that the PSCI Security Standards Council released new guidelines aimed at equipping

developers, merchants and payments processors with the information needed to close the loop on

those concerns. The guidelines center around three key areas: the security of a payments

transaction, the security of a mobile device and the security of the payment acceptance system used

by the merchant. The PCI standards suggest strongly that until mobile hardware and software

solutions can meet these guidelines, the best option for merchants is to use a PCI-validated, Point-

to-Point Encryption (PCI P2PE) solution.

iPads and iPod Touch(es) retail revenues in big ways. JCP’s CEO Ron Johnson told Wall Street

analysts at the beginning of March that twenty-five percent of its store sales came via MPOS devices

and that all store associates will have handheld iPod Touch devices by the end of May. This comes


on the heels of Nordstrom’s first-mover decision to do the same about a year ago. More recently,

Barneys (7 of its 24 stores), Urban Outfitters (all of its stores and affiliated brands), Coach (all of its

factory outlet stores) and REI (120 stores) have all made the move to MPOS devices to make it

easier for consumers to transact and for associates to capture better customer information.

MPOS is where the innovation action is. The Innovation Project 2013, an industry convening at

Harvard in March hosted by PYMNTS.com, highlighted the significance of MPOS in driving

innovation in the retail environment. Ten percent of the 40 newly “birthed” innovators that were

showcased at the Innovators Expo were MPOS solutions of one form or fashion, and The 2013

PYMNTS Innovator Awards winners had a category dedicated entirely to MPOS solutions. Gold,

Silver and Bronze Medal Winners in that category were Groupon/Breadcrumb, LightSpeed and

GoPago respectively. Three other Gold Medal winners (of the 15 categories) were also MPOS

solutions or included them as part of their solutions: Square, PayPal (for POS including PayPal Here)

and Intuit/Go Payment.

The MPOS Organizing Methodology: The MPOS TrackerTM Pyramid

The organizing framework for the MPOS 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 PYRAMIDTM 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 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 only 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

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 consumer-facing applications such as digital 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.


MPOS Player Profiles | New for March 2013

Flint Mobile

Category Core

When Launched November 2012

#Customers/volume More than 30,000 mobile app installations after first 3 months.

Customer Focus Small Businesses

Geographic Coverage United States

Pricing

Fees for debit card transactions are 1.95% + $0.20 per charge. Fees

for credit cards are 2.95% + $0.20.

Flint is a MPOS solution that does not require a dongle or peripheral device to accept physical cards. It,

instead, uses proprietary image scanning technology to scan the main card number complimented by

keyed entry of card verification details. The patent pending technology allows the mobile device to

securely capture the credit card number without taking a photo of the full card and without storing card

images on the device. Flint has integrated real-time fraud detection and several payment gateways to

enable real-time transaction authorizations with a PCI compliant gateway partner. The solution works

on iPhone, iPad or iPod touch devices and only in the US.

SoftSpace

Category Core

When Launched March 2012

#Customers/volume n/a

Customer Focus Small to medium sized businesses

Geographic Coverage 9 Countries including Kuala Lumpur, Malaysia, Thailand, North

America, Australia, Indonesia and the Philippines

Pricing

n/a

Soft Space is a MPOS solution that can accept EMV payments and is Level 1 and Level 2 certified and

multiple forms of card payments. In October last year, Soft Space teamed up with MOL (a Malaysian

company that develops and operates payment systems) to process its transactions. The SoftSpace

device is provided by ID Tech.


Thyron/Spire

Category Core

When Launched 1989


Customer Focus Financial and Retail organizations

Geographic Coverage Europe, mostly Spain and the UK

Pricing

n/a

Thryon is the only MPOS solution that is fully compliant with Visa Europe’s recommendations for mobile

payment applications. It was acquired in March by Spire Payments, the third largest MPOS player in

Europe in March of 2013. Spire provides Chip and PIN / PCI SRED certified mobile point of sale (MPOS)

solution alongside the new range of Spire Payments terminals, due to be rolled-out in Q2 of 2013. Based

in London, Thyron will become a wholly owned subsidiary of Spire Payments UK Limited, and will

become the focal point for Spire’s strategy on mobile payment technology and products.

PaySimple

Category Core + Front and Back Office



Focus Small and Medium Sized Businesses.

Location US and Canada

Pricing Monthly subscription fee of $34.95 2.29% + .29 for credit card transactions and $.55 for ACH Merchant must have a merchant account

PaySimple, creates cloud-based, receivables automation technology for small businesses that help them

collect and manage their receivables and payables. March was the month that they expanded into

MPOS with an iPhone and Android app that not only processes electronic transactions but also manages

customer databases and can handle recurring payments. In addition to processing debit and credit

cards, these apps also process ACH payments, can create and access customer lists and profiles, and

collect payments from existing customers without making merchants re-enter payment credentials. The

device is provided by Anywhere Commerce.


Blue Bamboo

Category Core

When Launched December 2012 (Beta released June 2012)


Focus Mobile sales and services, Transportation and delivery, banking and

hospitality

Location US

Pricing N/A

The Blue Bamboo PocketPOS™ P200 Card Reader allows the transaction of iOS and Android products,

other smart phones and tablets into a secure POS solution to read the cards that follows the standards

of ISO 7813. It supports Bluetooth™, Smartcard, contactless, MSR, Pin Entry technology, in addition to

wireless mobile application printing.

http://www.bluebamboo.com/products/show.asp?id=27

http://www.bluebamboo.com/products/show.asp?id=27


MPOS Merchant Facing Players | March 2013 Updates

Adyen Shuttle

Category Core + Back

When Launched December 2012

#Customers/volume Three Merchants: Gidsy, Teicketscript, and De Bijenkorf

Customer Focus Small specialty retail to medium to large sized businesses

Geographic Coverage European Union

Pricing

€99 to purchase and €10/month + interchange fee that varies from

country to country

Adyen is best known for its role as online and mobile services gateway for large European-based

enterprises like Vodafone, KLM and Groupon. But it changed its game a bit when it launched its own

MPOS solution, Shuttle, on December 2nd. Shuttle enables merchants to accept Chip & PIN payments

from a mobile device and is said to be fully EMV complaint. But what’s different about Shuttle is that it

connects to iOS and Android smartphones and tablets wirelessly via Bluetooth and has built-in key-pad

and OLED display. In addition to the more “standard” back office capabilities that it enables such as

emailing receipts to customers, it is able to leverage its online platform to enable the delivery of risk and

fraud modules, user management, payment reporting and other features typically required by multi-

channel retailers it helps merchants bridge the on/offline worlds. It is said to be able to match customer

information from cards used on its online properties when that same card gets used in stores, enabling a

host of merchant-enabled opportunities that leverage that information.

The Shuttle device is PCI PTS V3.0 Certified including Open Protocols and SRED UKCC Certified,

MasterCard TQM Certified, and CE, FCC and IC certified.

Update: Processing fee varies from country to country between 1.60% - 3.95% for credit cards and a

range for debit transactions.

Intuit GoPayment

Category Core+Back Office When Launched August 2009 #Customers/volume 200,000 Focus SMB, political campaigns Location US Pricing 2.75% swipe and 3.75% keyed in rate or $12.95 per month. 1.7% per swipe

2.75% keyed in rate in the US.

Intuit launched GoPayment in 2008, as a way for small businesses to improve sales and cash flow by

using their mobile phones to accept card payments. The solution was targeted mainly to service


businesses (plumbers, electricians, field service personnel) who were not card accepting merchants but

viewed electronic payments as an opportunity to get paid immediately after the job was finished or an

order taken. Since that launch, GoPayment has expanded beyond payment card acceptance with a

magswipe strip. GoPayment has also developed a concept demo to process NFC using GoPayment and

includes integration with Intuit’s QuickBooks Point of Sale and financial software, including inventory

management, reporting, trends, etc.

Update: Intuit Pay officially launches in the UK. Similar to Intuit’s US offering, Intuit GoPayment, the

offering will integrate easily into Quickbooks

NCR Silver

Category Core + Back + Front Office When Launched July 2012 #Customers/volume n/a Focus Bringing big business technology to small businesses

Location US

Pricing

Full hardware package is $599 a month to connect a mobile device. First device is $79/month and additional are up to $29/month. ($.10 per transaction up to $29).

NCR has entered the MPOS space with NCR Silver that gives small business owners IP-enabled/mobile

transactions and detailed inventory, sales and profitability reporting capabilities using a tablet device.

The system uses an iPad app that comes with a stand and connects to an NCR wireless receipt

printer and cash drawer. NCR Silver provides a dashboard, where users can track inventory, profits and

losses and run customer relationship management and email marketing applications.

Update: mobile point-of-sale (POS) will now make it possible to load, manage and withdraw gift cards

from the Point-Of-Sale (POS) devices

Payleven

Category 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

Pricing 2.75%

Launched by the entrepreneurial Samwer brothers, Payleven, is a mobile payment system available for

iOS and Android. Founded in Germany, the company has expanded operations to the UK, Italy,


Netherlands, Poland and Brazil. The system processes basic card payments, to enable small and

independent merchants to accept payments. Originally only able to accept MasterCard and local bank

cards in Germany and the UK, Payleven announced in early October 2012 that they accept Chip & PIN

payments. This move is said to make Payleven the first pan-European MPOS company to be fully

complaint with the standards of all major credit and debit cards.

The company has released a Chip and PIN reader. Payleven has established a partnership with Berlin

Brandenburg Taxi association, Taxiverband Berlin, to trial their new payment reader. The system is being

used by about 100 taxis in Berlin.

Update: Payleven is now authorized as a payment institution by the UK’s Financial Services Authority; and it is also now a certified MasterCard’s mPOS partner.

PayPal Here

Category Core + Network


#Customers/volume 200,000 Merchants

Customer Focus All areas of business, merchants

Geographic Coverage US, Canada, Japan, Hong Kong, Australia and UK

Pricing

2.7% transaction fee, with no monthly fee. The fee for non-swipes goes up to

3.5%, with a $ 0.15 fee

PayPal Here is a PCI compliant MPOS solution that allows SMBs to accept electronic payments, payment

by PayPal and check by leveraging its Card.io acquisition to enable a user’s mobile device’s camera to

scan the front of card to input the numbers and expiration date. PayPal Here also allows users to track

cash payments.

Update: PayPal added a tablet version of its MPOS solution, PayPal Here, to its offerings to enable

barcode scanning and wireless connectivity to cash drawers and printers. PayPal’s integrated

technology from Red Laser enables merchants to scan and load a list of merchandise that they sell to

via their MPOS systems which provides robust inventory management capabilities.


Sales Vu

Category Core + Front + Back

When Launched August 2011


Customer Focus SMB through upper Mid Market, targeting the restaurant, retail and

service industries

Geographic Coverage US and Canada

Pricing

2.7% flat processing rate for both swipe and keyed transactions in

the US and the Canadian rate varies from 1.73%-3.26% per

transaction

SalesVu offers an iPad and iPhone POS system that targets the POS needs of the restaurant, retail and

service industries, including those with multi-locations. The company will release its Android solution in

early 2013. The platform expands beyond payment acceptance to include cloud-based enterprise

reporting of the entire business, management of customer history, integration into Quickbooks, online

ordering and an open API to enable new functionality to be added as developed. In addition, the

program offers retail and hospitality- specific POS services, like receipt splitting, tracking of order

histories and inventory management.

Update: Pricing in Canada is different than pricing in the US. 2.7% flat processing rate for both swipe

and keyed transactions in the US and in Canadian the rate varies from 1.73%-3.26% per transaction.


Appendix

Core Back Front Back + Front

Open Back + Open

Front + Open

Network

BlueBamboo

Circle it Up

Flint MTS POS

PocketPOS

YES Bank

Mswipe

MTS

O2

Payleven

pay@mobile

Softspace

Spire/Thyron

Swish

Vantiv

Visalus

Cube

RevCOIN

Adyen

Ezetap

Intuit Gopayment Sage Payments PayAnywere

Citibank

Corduro

GobalBay

GoPago

Groupon

Mobile Pay On Demand

MRL Posnet Revel

KWI Cloud9

NCR

ShopKeep

MRL PaySimple

Posnet Lightspeed

Retail Cloud

Sales Vu

Miura Shuttle

iZettle

Handpoint Mpowa

Payleven

Payfirma Swiffpay Square

PayPal Here

SumUp

Powered By Suppliers Adaptive Payments | Anywhere Commerce | CHARGE Anywhere| creditcall | Fiserv | ID

Tech | Magtek | MRL Posnet | Payworks | ROAM | Swiff

Key – Bold Italics is new to the pyramid as of March 2013

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 2013. 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

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 [email protected].

If you would like to be included in this report and/or would like your information to be updated, please

contact us at [email protected] 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.

mailto:[email protected]

mailto:[email protected]


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

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).

organizing the mobile point of sale ecosystem | march 2013 · the mpos organizing methodology: ......

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