Paris, March 8, 2013
Article by François Lecomte-Vagniez, Expert EESTEL – Partner and founder of Lobary
The mPOS is the story of a small startup that in 2010, offers a mini player, almost for free, enables any individual or business (North American) to turn a smartphone or tablet in payment terminal (mPOS: Mobile Point of Sales). Its business model is clear: 2.7% fixed fees charged per transaction. Nothing else.
3 years later – you have recognized this startup – Square acquires more than 10 billion USD of bank flows with 3 million registered users and always breathtaking growth …
European banks are questioning because Square uses its own payment institution, depriving US banks a portion of their value on the acquisition of bank flows.
So … Is the success of Square reproducible in Europe and in France?
Obviously, the development of the solution was made possible by the specific characteristics of the North American market that are not found in Europe. There are at least two major differences: Technology – Square does not meet the regulatory requirements « chip and pin » of « card present » mode EMV transactions – and economic, the acquisition commissions on universal payments in Europe are much lower to those practiced by Square.
Europe is therefore a protected market solutions « Square-like » … but this does not she reveals an opportunity to seize for the banks?
On the technical point, Visa Europe recognizes evaluate solutions for m-POS twenty Aspiring candidates meet EMV level 2 European constraints (and CB, France), which require a specific device for PIN entry (PIN) associated with the card security key (CHIP). Ditto for MasterCard, which announced 19 certified solutions at the Mobile World Congress in Barcelone.En this, our European rules differ from the USA because as issuing banks bear the risk of fraud, they are based to require strict safety means for banking they garantissent.Déjà several hardware solutions are found at the right level of security for Europe and should be placed on the market in the coming weeks. Thus, the first barrier to entry should fall, even if under the user, the m-POS solutions based on a separate payment terminal smartphone or tablet, have a less attractive ergonomics – and the overall solution is more expensive – a mini player connected directly to the brake device mobile.Un the success of m-POS Europeans, certainly, but since security is ensured …
On the question of the economic model, the acquisition commissions are much lower in Europe than in the US, and have been revised for small amounts in 2011, following the work of the Maille Committee of the National Assembly.
Banks are wondering if there is a business model on the m-POS in France …
The answer is probably positive, and here are some arguments:
Trade pays higher commissions when the business interest is obvious.
For illustration, the PayPal acquisition commissions are higher than those of CB transactions, and comparable to that of Square. Despite the significant extra cost compared to CB, the third of e-commerce sites use PayPal in Europe. Simply because right now the customer experience is rather better with PayPal for a payment « OneClick » with a credit card for Internet purchases. The fact is demonstrated by the 5 million PayPal users in France.Egalement, some B2B marketplaces such as professionals, ephemeral sales (market, stocking …), sales / delivery are currently under-equipped because of inadequacy of the offer to acquire via conventional TPE compared to their business needs. Here are new markets to conquer.
The mobile services cross the channel partners have a high value.
The issue of trade is in its ability to handle a cross-channel marketing, between benefits or services offered to consumers and the expected effect: satisfaction, loyalty attendance, up-selling … Several retailers equip their Tablet vendors, the m-POS is the missing link to complete the sale in the vicinity, from beginning to end. In this regard, note that Square has completed its offering his own wallet to consumers.
Regulatory constraints on the use of cash will harden, with the effect of strengthening the computerized exchanges.
Already, payment cards « contactless » used to replace the use of cash for small amounts, with a higher use value: simpler, faster, safer … Similarly, with mobile payment, secure EMV or remote, new uses even easier monetary transactions dématérialisées- the point of view of the show from the acquisition. With new constraints for the fight against fraud and money laundering, customs cards and mobile payment should develop.
More generally, the m-POS devices facilitating exchanges between cards and mobile at all times and in good security, respond to market needs for the coming years:
First, the Commerce faces the onslaught of consumers with mobile and process transactions from an omni-channel relationship. In some categories of outlets, it is possible that the number of cases decreases in favor of sellers equipped with interactive selling solutions (screens and Tablet) coupled to a mPOS type of POS system.
On the other hand, even when it’s omni-channel shopping, the consumer is committed to the use of his credit card, hence the obvious need to be able to couple paperless means of payment (from all channels) with universal European system of « card present » which has strong confidence capital.
With mPOS, banks are preparing to turn what at first glance, could threaten their market share, competitive advantage. They can keep – and perhaps enhance – their market share to cash flow and bring more value-added services to their customers, both in transmission with the duality between cards and mobile wallets, with that acquisition solutions m -pos functionality for universal payment cards and mobile to mobile transactions.
As in North America, we are facing a nearby market to explode in Europe, at all levels, beautiful battles to win market share. This is where we can measure how Square was visionary …