I’ve noticed a few bolg posts and even in the latest apple iphone commercial, a credit card terminal app is featured on the iphone. For $49.99 it’s a whole lot cheaper than a wireless credit card terminal out there which run in the price range of $600.00 to about $1500.00.
The Innerfence iphone Credit Card Terminal App promises to process credit cards natively on the iphone tying into the authorize.net payment gateway to run transactions. The demo is very fast even on the edge network and it has intuitive fields such as emailing the customer their receipt as well as asking the customer to opt into a newsletter.
For $49.99 that sounds really good, But who is going to use this app? What are the true benefits? By processing your transactions this way, how much is your processing costs going to be?
Who this App is For?
I think this app is for very small, hobbyist business owners who have the occasional trade show or who occasionally sell there wares via a market. This app is not for the business owner who has many trade shows and processes transactions on a regular basis in the field. Here’s why:
1. Keeping Your Customer At Ease:
With credit card fraud as high as it is now, not many people will be comfortable giving their credit card to someone to enter in that information into their cell phone. It screams of fraud. It may not be, and you may be totally legitimate, but the perception of someone entering their credit card number into your CELL PHONE is scary. The customer will be thinking, is that safe?
2. Cashier Error
I have an iphone. I am on it everyday either texting, twittering, etc. I have gotten much better in typing out what I want. However, how many tries will it take to enter in the right credit card number. What if you make a mistake but don’t know it and it comes back declined. You will have to tell your customer their card declined, when in essence it didn’t. How many times will a customer allow you to enter in their credit card number into your CELL PHONE before they cancel the sale? Cashier error when entering credit card numbers into an iphone will be rampant and will have consequences for the business owner.
3. Your processing fees are going to be sky high.
Firstly you are entering the card number that will downgrade your transaction to a minimum Mid Qual with rates in the range of 2.25% – 3.00% depending on your processor if you are set up as retail (most businesses are). Your transactions will downgrade even more to Non-Qual if you don’t enter information like the customers address, name etc.You may pay $49.99 for this app but would pay apx 3.00% – 4.5% in processing costs for every transaction you accept. Maybe the business owner who makes an occasional sale here and there would be satisfied with this but a person who is running multiple transactions per day, this app would not work.
4. Higher Chargeback Risk.
Let’s say you run the card via the iphone. What protection do you have that you actually sold something to your customer. There is no receipt with a signature line, there is no shipping tracking number to verify that a product was purchased and you as the business owner delivered the product. How would you prove in case of a chargeback dispute that you actually sold and the customer received your product?
5. Professionalism
It’s just plain tacky. It may be cool, but your main concern is to sell your product. “Cool” helps only if it helps you sell more. Customers want to feel as though they are doing business with a company that knows what its doing, entering their credit card number into your CELL PHONE says amateaur. The customers may have concerns about you losing your phone, will their credit card data be stored? Like I said their concerns may be unwarranted may but do you want to explain that as a disclaimer every time you take a payment.
Now there is hope for this app. I do believe there is potential for accepting credit cards via the iphone however more needs to be done. For instance, connecting a card swiper to the iphone. This may need to be manufactured, but it will reduce cashier error and you won’t look like you are entering the transaction into your cell phone. It will also lower your procesing fee. Swiped transactions cost an average of 1.80% verses the 3 and 4% keying it in would cost.
This app also needs a receipt printer. The receipt printer wil allow you some protection from chargeback and will help put the customer at ease because that is normal way they process credit cards. You can still get their email address and send them a copy of the receipt.
A great idea would be a bluetooth enabled cardswiper/receipt printer that would pair with the iphone to accomplish this. If Innerfence can do this and get that working, this would be a great alternative to a wireless credit card terminal.
Depending on the cost of the additional equipment needed, you may be better off sticking with a wireless credit card terminal.
