NEW YORK — Small business owners looking to ditch traditional credit card readers have more options than ever.
Online retailers Amazon and Etsy are just two of the latest companies to offer mobile credit card readers to small companies, joining the likes of Square, PayPal and Intuit. Mobile credit card readers are small devices that stick into a smartphone or tablet and allow credit cards to be swiped and accepted from anywhere. Small business owners say mobile readers can be cheaper than traditional in-store credit card readers, which often charge higher fees.
Dr. Greg Werner, a chiropractor in New York, ditched his traditional credit card reader for Square four years ago to save money. Werner has two offices, one in Manhattan and the other in Eastchester, New York. His prior credit card reader company charged his business about $50 a month for each machine. Werner now has a Square at each office that he plugs into his iPhone or iPod Touch. The device itself is free, but it takes 2.75 percent of every swipe. Werner’s old credit card reader charged about 1.7 percent for each swipe for most credit cards, plus an additional 15 cents. Swiping an American Express card cost about a percent more. He estimates that he’s saved several thousand dollars since making the switch.
The device has also been a hit with Werner’s patients, who like that Square emails them receipts. “My patients love it,” he says.
Since starting in 2009, Square had become one of the largest mobile credit card reading companies on the market. Square no longer discloses how many businesses use its device, but in 2012 the company put that number at more than 2 million businesses. And for the first time earlier this month, it processed more than $100 million in sales in a single day.
Businesses need to do the math to see if using a mobile credit card reader is cheaper than a traditional one, says Todd Ablowitz, president of payments consulting company Double Diamond Group. Bigger businesses that accept a lot of credit card payments may find traditional credit card terminals cheaper in the long run. They charge monthly fees, but they generally take a smaller percentage of each transaction, sometimes below 2 percent, says Ablowitz.
Mobile readers make sense for online businesses that rarely sell goods in person. Ruthie Youngman, the owner of jewelry company LoveYourBling, mostly sells her handmade baubles on LoveYourBling.com and online marketplace Etsy.com. But she occasionally heads to craft fairs and other events, which is when she brings Square’s device with her. Without the ability to accept credit cards, she would miss out on potential sales. “People just don’t carry cash anymore,” Youngman says.
Small business owners should also be aware of change coming to credit card industry this year. Credit card issuers will start making cards with computer chips that are supposed to make it tougher for hackers to steal credit card numbers and other information. The chip-based cards can be dipped into a terminal, instead of being swiped. In October, merchants that don’t update their credit card terminals to accept chip-based cards will be expected to pay the cost of any fraud that occurs on one of the cards.
Square is already taking pre-orders for a reader that can accept cards with chips. The new reader, which will cost $29, can also swipe cards, and the free swipe-only device will continue to be available. Square’s competitors haven’t announced plans yet, but many expect to offer a reader than accepts chip-based cards in the future.
Not all card issuers will be offering chip-based cards right away, Ablowitz says, so small businesses will have to decide if they want to make the switch based on how many chip-based cards their customers start to use.
HED: 8 mobile credit card readers, and what they cost
Need to accept credit cards for your small business? You have more reader options than ever. Online retailers Amazon and Etsy are the latest companies to offer the devices, which plug in to smartphones and tablets and let business owners accept credit cards anywhere. They join established players such as Square and Intuit GoPayment.
The card readers work the same: They take a percentage of each transaction when a card is swiped, usually about 3 percent. They charge more if the card needs to be manually typed in, instead of swiped. Most work on Apple’s devices and those that use Google’s Android operating system.
Here’s a look at some of the players:
AMAZON LOCAL REGISTER
The online retailer charges $10 for its reader, but credits the money back after it is used. Amazon charges 2.5 percent for every card swipe and 2.75 percent when card info is typed in manually.
CHASE MOBILE CHECKOUT
Chase’s reader is aimed at mid-sized businesses that would use it more frequently. Users must have an account with Chase. It charges $9.95 a month for the service. A minimum of $25 in transaction fees must be accumulated every month, or the business owner pays the difference. It charges between 1.99 percent and 3.76 percent, plus 25 cents, for each swipe. Chase sets the cost, depending on the type of business. Those interested need to ask Chase for fee information.
ETSY CARD READER
This reader, from online marketplace Etsy, charges 2.75 percent per swipe and 3 percent, plus 25 cents, for manually entering the card number. You’ll need a shop on Etsy to use it. Demand for the Etsy card reader was higher than expected when it was unveiled last fall, and the company ran out of readers in late October. The company says it will have more in early 2015.
This card reader comes from Intuit, the company behind accounting software QuickBooks. It has two plans: one has no monthly fee and charges 25 cents per transaction, plus 2.4 percent per swipe and 3.4 percent for typed-in card numbers. The other is $19.95 a month and charges 25 cents for every transaction, but charges lower percent fees: 1.75 percent for swiped cards and 3.15 percent for typed-in card numbers.
The payment processor’s card reader costs 2.7 percent per swipe. For card numbers that are added manually, the cost is 3.5 percent, plus 15 cents.
This reader comes from North American Bancard, a credit card processing company. It charges 2.69 percent per swipe and 3.49 percent, plus 19 cents, for manually entered numbers.
Owned by Capital One, Spark Pay has two plan options. One, aimed at merchants with a lot of credit card transactions, has a $9.95 monthly fee and charges 1.95 percent for Visa, MasterCard and Discover cards, 2.95 percent for American Express cards and 2.95 percent for card numbers that are typed in. The other plan has no monthly fee and charges 2.70 percent for Visa, MasterCard and Discover cards, 2.95 percent for American Express cards and 3.7 percent for typed-in transactions.
The company takes 2.75 percent of each swipe, and 3.5 percent plus 15 cents for credit card information that is typed in.
Amazon Local Register: localregister.amazon.com/
Chase Mobile Checkout: www.chasepaymentech.com/mobilecheckout/
Etsy Card Reader: www.etsy.com/reader
Intuit GoPayment: payments.intuit.com/mobile-credit-card-processing/
PayPal Here: www.paypal.com/webapps/mpp/credit-card-reader
Pay Anywhere: www.payanywhere.com/
Spark Pay: www.sparkpay.com/