Price War To Benefit Mobile Micro-Merchants

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Intuit follows Square, by dropping the 15 cent transaction fees for its GoPayments micro-merchant solution.

GoPayment’s pricing for low-volume merchants (~ $1,000 or less in card volume per month) card present transactions is now 2.7% and 3.7% for higher risk card not present transactions. For higher-volume merchants, the fee is 1.7%, and 2.7% for card-not-present transactions. Intuit retained its $12.95 monthly fee for higher-volume merchants.

Sepharim POV:

Companies like VISA are very interested in this merchant segment because of the large potential conversion of cash and cash equivalent transactions that could expand the value of card-processing sector.  However, micro-merchants have been shown to be a fickle group who has high attrition rates and low overall transaction value/volume ratios. To make this business profitable companies must do three things:

Continue to look for ways to drive down merchant onboarding costs.
Develop improved real time risk management and fraud techniques.
Continue to be creative in terms of offering new features and lower pricing.
Drive improvements in system availability and lower latency.

Item 4 appears to be a growing concern as some merchants in busy markets (NYC, SFO and Chicago) have indicated issues that appear to be related to wireless network congestion.

Many of the lessons learned in these days early of mobile payments, that leverage existing magnetic card technology, will be applicable to Near Field Communication (NFC) payments as that market emerges.  Mobile micro-merchant solutions should be considered an important evolution in alternate payment methods for at least two other reasons:

Gaining a better understand about how comfortable consumers will be with alternative mobile payment solutions.
How will theft and fraud evolve and be remediated?

For merchants, not having a mobile payment solution within 5 years, will be as antiquated as a brick and mortar retailers not having an online presence 5 years ago.
Its not a matter of if, but when mobile payments will become the next growth hormone of electronic payments.
With Intuit and Square lowering transaction pricing, can we expect to see VeriFone and Apriva follow?