Competition And Pricing Could Have Been Culprits in Flint Mobile’s Apparent Demise

Flint Mobile Inc., a startup whose app allowed merchants to process transactions by using their smart-phone camera to scan customers’ card numbers, abruptly ceased operations earlier this month and has arranged for merchants to switch over to Stripe for processing. That’s according to MerchantMaverick.com, a merchant-processing review site

Flint, which was founded in 2011 and raised $20.4 million in four funding rounds, served mostly photographers and other service providers, but in 2014 it introduced a feature that allowed merchants to accept online payments.

Based in Redwood City, Calif., Flint charged 1.95% for debit card payments and 2.95% for credit card transactions.

The question of why Flint appears to have shuttered—its merchant sign-up page says new accounts are suspended—isn’t certain. Digital Transactions News received no response to an email sent to Greg Goldfarb, chief executive and founder. But pricing, and a proliferation of competitors, may have played a role. Square Inc., Intuit Inc., PayPal Holdings Inc., and many others, startups and established companies alike, offer similar mobile point-of-sale services.

“The shallow end of the mPOS pool is really shallow. Margins are paper-thin, there are a bunch of competitors, and differentiation is difficult at best,” Thad Peterson, senior analyst at Boston-based Aite Group LLC, tells Digital Transactions News via email.

“Given the proliferation of providers in the space, it’s inevitable that there will be fallout,” he says. “If the space is compared to other ‘hot’ tech categories that have followed similar paths, there is a rapid buildup of competitors as the concept gets traction, followed by the establishment of a hierarchy of players, with a few grabbing awareness, share, and scale, and the disappearance of everyone who didn’t. We should expect a period of consolidation as the category stabilizes.”

Another factor may have been a misinterpretation at Flint of how merchants value payment-processing services, says Adil Moussa, principal of Omaha, Neb.-based Adil Consulting.

“If one market player is able to extract 2.75% from happy and willing merchants, copycats believe they can do it for 1.95% without understanding the true value brought by the original player,” Moussa says in an email to Digital Transactions News. “The market has shown over and over (and will continue to show) that merchants will pay extra for many features, even intangible ones. The real issue is knowing how to strategically carve yourself a piece of the market and make yourself relevant to that piece of the market. Being a generalist that relies on rapid scale is not going to fix the math.”