Payments are going mobile, and credit card companies do not want to be left behind. The big players are arming themselves to make sure that wherever the mobile payment field is headed, they get a little piece of the action.
Visa Invests in Square
Square is a mobile payment system that launched last May and allows anyone to accept payment through their mobile device. Square appeals to merchants who otherwise do not accept credit cards through a merchant account, such as small businesses, artists, or other vendors that want to avoid paying monthly fees to credit card companies. In the first three months of 2011 alone, Square processed $66 million in transactions. Not bad for a start-up company. But things are getting even better for Square as Visa announced this week plans to invest an undisclosed amount of money. In return, Visa gets a small piece of the action and has joined Square’s Board of Advisors.
Visa’s recent move will also open up new doors for the credit card company, as more merchants will be accepting credit cards for payment. According to the Central Penn Business Journal, this market includes some 27 million small businesses.
MasterCard in the Mobile Field
Visa isn’t the only company aiming to go big in the mobile payment field. MasterCard has been working its game since 2002 when it developed its PayPass system. PayPass-enabled cards contain a chip that allows shoppers to wave the card in front of a terminal in order to make charges. This takes advantage of a technology called radio-frequency identification, or RFID. The company now has 88 million PayPass cards and devices in use at nearly 300,000 merchant locations.
MasterCard is also teaming up with Google to allow Android users to make mobile payments. The Android device would contain everything a consumer needs, from being able to make payments to receiving offers and discounts after they make a transaction.
American Express Won’t Be Left Behind
As for American Express, it just launched Serve, a new payment network that lets people pay each other online through mobile phones or at merchant locations. Serve users manage their accounts through a smart phone app or with a prepaid card. Users can transfer funds from their debit cards, bank accounts or credit cards.
American Express also plans to partner with the start-up mobile payment company called Payfone, which also enables users to pay through their mobile phones.