The Global Spread Of The Micro-Mobile Merchant

The growing ubiquity of mobile devices is changing the face of business transactions around the world. Merchants are no longer forced to invest in large, expensive countertop machines in order to accept payments beyond cash. And those who have already invested in POS systems are no longer tied to their countertops. Mobile is leveling the playing field for merchants in countries all over the world, making it possible for businesses large and small, brick-and-mortar or on the go, to accept payments anywhere in any form. New technologies are also forging a strong connection between mobile, web and countertop payment systems, creating value for customers and merchants alike throughout all aspects of the consumer-business relationship. All of this will inevitably have a huge impact on the global economy.

In fact, last year’s March cover story dove into the size of this opportunity. Though there were already 8 million merchants accepting cards in 2012, reporter Marc Abbey pointed out there are also more than 21 million businesses in the U.S. with just one employee. Many of these qualify as “micro-mobile merchants,” meaning their businesses are small and lack a fixed location. Farmers selling their goods at market, crafters hawking their wares at fairs and food trucks vending sandwiches from their vehicles all fall into this category.

Micro-mobile merchants often do not have the resources (or the space) to invest in a full-scale POS system, but all of them could potentially accept mobile payments. This presents a massive growth opportunity for mobile wallet providers, payment services companies and, quite frankly, the entire payments industry.


With micro-mobile merchants in the picture, it becomes clear that the market for payment acceptance is not even close to tapped out. Mobile payments solutions opens doors for these types of merchants, many of whom would otherwise not consider accepting any form of payment beyond cash. This, in turn, presents micro-mobile merchants with new customers: people who don’t regularly carry cash (and many don’t), allowing them to complete transactions with cards, their smartphones or even just their names or faces, depending on the technology implemented.

With tools like Square, iZettle and MPOWA, mobile payment acceptance is spreading rapidly throughout the world, especially among micro-merchants. The opportunity for growth is even bigger internationally than in the U.S.

Believe it or not, developing countries are in the process of “leapfrogging” countries in the first world, becoming “mobile first” nations, where a huge percentage of the population has access to the Internet via cell phones, even though most do not have access to a computer. A salient example of this is Kenya, where 31% of the country’s GDP is currently spent through mobile phones. That’s because mobile makes commerce possible even in very remote areas and places where people do not have access to banks and other financial tools. This has a huge impact on their economy, obviously, and much of it comes in the form of empowering micro-mobile merchants.

Many other nations are also pulling ahead of the U.S., including those that aren’t going “mobile-first.” Canada has established itself as a leader in the payments space, for example, but according to a recent Deloitte report, it is still relatively immature when it comes to mobile payments. However, despite low mobile-payment penetration, analysts believe the country will adopt them widely within the next couple of years.

The U.S., on the other hand, usually at the head of the pack when it comes to technology, has lagged behind for decades when it comes to payment technology. For example, as the rest of the world has adopted EMV (or chip-and-pin) credit and debit cards, the U.S. has stubbornly remained on the rails of the much less secure magnetic stripe cards. There are a few reasons for this. One is our widely distributed legacy infrastructure. Another is the very powerful credit card and banking lobby in Washington.

It’s no surprise, then, that the few EMV requirements the U.S. has adopted at this point won’t even go into full effect until 2015 — decades after most countries accepted EMV as the standard. Even now, many parties in the U.S. payments ecosystem are still combating the arrival of EMV and the considerable burden of updating payment hardware and software. This has resulted in significant debate around who should bear the responsibility of paying to upgrade legacy infrastructure.

This legacy infrastructure is also, of course, part of the reason the U.S. has been relatively slow to adopt mobile payments. Developing countries in particular, without old machines and technologies bogging them down, have been able to move forward more rapidly and efficiently with mobile payments, as Kenya clearly demonstrates.

But there is a small group in the U.S. that is showing the benefits of mobile payment capabilities. Micro-merchant-friendly payment technologies are allowing some small businesses to move leaps ahead of those who are saddled with expensive, outdated countertop technology. Websites like Etsy have enabled artisans to more easily earn a living through their craft than ever before, while the burgeoning farm-to-table movement has empowered farmers to sell directly to consumers at a previously unheard-of scale. Trends like these, along with the increasing scrappiness of our workforce in the face of economic challenges, have spawned a robust new generation of micro-mobile merchants in the U.S., many of whom are itching for a convenient, cost-effective and ideally mobile way to accept payment from their customers.

Micro-mobile merchants and single-operator businesses without employees — especially those without a brick-and-mortar storefront — are finding the new payments technologies allow them to expand their businesses more quickly and easily than ever before. Some examples of these technologies include Square, iZettle and MPOWA:

  • Square makes it possible for anyone with a smartphone to accept payments via credit card anywhere they are. This means farmers at markets, crafters at fairs, exercise instructors teaching classes in parks and all other manner of micro-merchants have the power to make a living regardless of where they are. It lowers the barrier to entry and has empowered countless businesses. The technology continues to spread daily; PayPal and Intuit have produced similar “dongles” that also allows micro-merchants to accept payments in the wild.
  • Similarly, iZettle is a social payments application that enables both peer-to-peer and business-to-consumer commerce. The system includes an app and a mini chip-card reader, similar to Square or PayPal, though it primarily focuses on EMV cards. That in mind, it is currently only available in countries where EMV has been the standard for decades, such as Sweden, Norway, Denmark, Finland, the UK, Germany and Spain.
  • MPOWA bills itself as an international, multi-platform payments acceptance platform. It features PCI-compliant and EMV-friendly software and hardware that makes it easy for merchants to accept payments on the go.

As these new technologies are developed and disseminated, consumer interest in mobile payments is growing. Many early adopters have already hopped on board to see what it’s all about, and others are watching eagerly from the sidelines, waiting to see which options will win out before they dive in.

A recent MasterCard study found that consumers are generally curious and optimistic, if a little guarded, when it comes to mobile payment technologies. In fact, 76% of consumers who have not tried mobile payments have positive attitudes toward the technology. The U.S. ranks, along with the Asia-Pacific region, as one of the most positive in terms of attitudes toward mobile payments. U.S. users are interested in compatibility and convenience, as well as value and long-term benefits, like security.

With a strong technology sector, a sizeable micro-mobile merchant base and a growing contingent of eager consumers, the U.S. has an opportunity to secure a large chunk of the mobile payments market. However, technology companies must work alongside merchants, banks and consumers to do what it takes to facilitate mass adoption.

This is where payment solutions come into play. It’s up to us to make it easy on the merchant to adopt the technologies and easy on the consumer to use them. This means cost-effective and easy-to-use solutions for merchants and value-adds like loyalty programs, coupons and relevant location-based offers for consumers. Demonstrating value for all parties involved is the only way to overcome barriers and achieve mass adoption in today’s mobile payment revolution.

Dan Dufault is Executive Vice President, Marketing and Solution Innovation, for Merchant Warehouse. He leads the company’s marketing activities as well as the solution innovation team, which is responsible for product innovation and management.

Dan brings more than 20 years of experience in both corporate and product marketing to this role. Most recently, he served as Global Director of Partner Marketing at Novell. Prior to that he held senior leadership positions at Kaspersky Lab and Progress Software.

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