BAMS Breaks into Mobile Acceptance with a Service that Eschews Aggregation

Just when observers might have thought the mobile-acceptance market couldn’t get more crowded, merchant processor Bank of America Merchant Services LLC on Tuesday announced a service called Mobile Pay on Demand. And while the service includes the now familiar card-reading dongle for attachment to a smart phone, it also features a number of twists that could set it apart in a market that has literally risen from nowhere in a mere two years.

The new service, which will go live Dec. 3, is aimed not just at plumbers, festival vendors, and other so-called micromerchants but at established sellers as well, according to Trevor Rubel, executive vice president for product, strategy, and business development at BAMS, a joint venture of Bank of America Corp. and processor First Data Corp. “It’s still a nascent market,” he tells Digital Transactions News. “There’s still a whole bunch of merchants that are still not served in their ability to take cards easily.”

Indeed, merchants using Mobile Pay on Demand will have their own merchant accounts. This runs counter to the trend among mobile-acceptance providers to act as account aggregators, standing in as merchant to let sellers begin taking transactions more quickly. While paperwork, underwriting, and other facets of establishing a merchant account have traditionally bogged things down, “we’ve shortened that process,” says Rubel, by automating as much of it as possible. So much so, in fact, that a new merchant can be running transactions within an hour, he estimates.

The importance of this may come to the fore later on, Rubel adds, when a seller grows and is ready to move on from the payment service provider (PSP) on whose account it is processing transactions. “In the long run, it’s important not to be tied into the PSP,” he notes.

To provide more reliable card swiping, BAMS turned to San Francisco-based Frog Design to come up with a dongle that connects, as do most rival devices, to the phone’s audio jack but holds fast to the mobile device by means of tensioned plastic strips, or “blades.” These make for a single-swipe transaction in environments where conditions or wobbly dongles require multiple attempts, BAMS says. Transactions are encrypted at the card reader, which features a longer read head than is customary (something also offered by Fiserv Inc.’s SpotPay dongle, introduced in September).

The card-reader is made by Montreal-based AnywhereCommerce, a company that last month was awarded two U.S. patents that appear to give it ownership of the process of mobile acceptance through a dongle that connects to a mobile device's audio jack. The Mobile Pay on Demand app was developed by Apriva LLC, a wireless-transaction solutions vendor in Scottsdale, Ariz.

While the service is available to all merchants, those that are BofA checking-account holders will receive next-day funding. This includes West Coast merchants, where the time zone can often make transactions miss cut-off windows, Rubel says. “We have all our funding windows programmed so West Coast merchants can get next-day funding,” he notes.

The new service also offers merchants access to iDeals Marketing Platform Pro, an offers platform that lets merchants post coupons, discounts, and the like. The service is free for the first year.

Pricing for Mobile Pay on Demand is somewhat more conventional. Swiped Visa, MasterCard, and Discover transactions cost 2.7%. American Express transactions run from 2.3% to 3.5% plus anywhere from zero to 15 cents. Up against its major rivals, the new service is on par with PayPal Here and cheaper than Square on monthly volume up to $10,185, given Square’s $275 monthly fixed-fee plan (available on volume up to $250,000 per year). Compared to SpotPay, which charges 1.99% plus an $8.95 monthly fee, the BAMS service is cheaper only on volume up to $1,260 per month.

And the pricing comparison against Groupon Inc.’s new service, rolled out in September, is even tougher. Groupon charges 1.8% plus 15 cents per transaction, though this is available only to merchants that have participated in a Groupon deal or plan to. At that rate, Groupon beats Mobile Pay on Demand on any monthly volume over $16.66.