VeriFone is going to announce tomorrow a whole new aspect to its business: A device to let iPhone and iPad users take credit card payments for a low fee. The idea may sound familiar. But unlike disruptive startup Square, Verifone has $10 billion in global transactions a year at its back—and it's promising a secure, versatile payment option from day one.
Sail is an app-supported dongle that plugs into the headphone socket on iOS devices and reads cards. The dongle is free, and the app is sophisticated enough to allow store owners to actually track inventory with it (meaning they could ditch using other software). The app can also hook up several iDevices to the same account so it could act across multiple sites for a medium-sized business as well as replacing several cash registers on shop floors. It offers clever analytics, and it can also hook up to existing countertop infrastructure, so it should be able to interface with existing registers and let store owners replace their existing credit card solutions.
The reasons for merchants to do this is price, says VeriFone's Brian Hamilton, VP of its SMB Commerce unit. "There are two pricing models to go to market: One which is no monthly fee and 2.7% [commission] per swipe that obviously matches the competitive price point in the market, and then there will be a $9.95 a month one at 1.95% per swipe, across all cards. That actually is a very competitive offering for the slightly larger business. If you do more than $1,000 a month in credit cards, 2.7% isn't the most competive you can get."
The hardware and app sound a lot like part of what Square offers, like the system payment-processing rival NCR has coming up, and a lot like an iPad-centric product offered by small player Revel Systems. So what differenitates VeriFone's solution?
"We looked very closely at what was already in the market in this space, created a product that supports the small merchant in ways above and beyond what current solutions can handle, and added VeriFone’s 30+ year experience in security, encryption, support and hardware," Hamilton says. "Many merchants need more than just being able to swipe a credit card with their iPhone. That is no longer a differentiator. VeriFone adds greater context with SAIL, using social media integration, multi-device management, and tools to assist with the growth of the business over time. By supporting an open platform and architecture, we will enable services and features above and beyond what a closed-loop platform will be able to support."
According to Hamilton, VeriFone has been working on this since late 2011—so it is a reactionary product—but was determined to be thoughtful about its version, as well as listening to its business partners and spotting holes in the service that its rivals are offering. That's why, for example, VeriFone's dongle is encrypted right from the get-go—a mistake that nearly tripped Square up early in its life.
Sail also has scope to support coupons (optionally built within the app itself by the merchant, and linked to Facebook) and customery loyalty schemes, and it connects to social media so consumers can, for example, access a vendor's Twitter feed from their digital Sail receipt. It has an API and full support for third-party apps to use its payment processing systems, and VeriFone has plans to address the chip-and-PIN cards that are very common overseas (including a free PIN pad for stores). And an Android version is en route.
If that's not impressive enough the software also has a barcode scanner in it, and because Sail's software ecosystem has the ability to track stock built in, it can allow consumers to make an interaction-free "self" payment a lot like Apple's EasyPay system. Add the fact that it's fully prepared to accept NFC payments...and suddenly Sail gets a lot more interesting: As Hamilton noted "Google, Apple, credit card companies are all who's trying to win here in the NFC versus alternative payments space," he suggested, and consumers shouldn't have to worry about how their new payment tech actually works, and nor should merchants, so VeriFone's SDK is flexible so: "You should be able to take the Google Wallet, and you should be able to take the iWallet." Did he just say iWallet? Yes.
"It's not like we built this thing from scratch, we're building it onto some pretty bullet-proof architecture that already exists," was Hamilton's pithiest comment and one that aims directly at Square. While Jack Dorsey's distruptive little system is processing $4 billion in transactions per year, it seems limited to the U.S....and VeriFone is aiming at the world, and has experience of $10 billion a year in transactions.
In summary, that dramatic mobile payments revolution we've been talking about? It just got a lot closer.