With the portal, developers who want to integrate with VeriFone will be able to access three APIs.

• The Sail Merchant enrollment API gives developers the ability to offer customers an easy way to enroll in a merchant account.
• The Sail payment API with mobile SDK enables developers of iOS and Android apps to embed Sail and accept credit card payments.
• Sail’s Data Sync API allows developers to keep track of Sail transactions in their app.

This can be helpful for developers who want to easily add payments, underwriting and settlement into their mobile apps. And it provides another competitor to services like Braintree and Stripe.

But it also opens the opportunity for developers of merchant services to integrate with Sail and offer their services through Sail. Sail is building out a developer showcase in its portal highlighting some of the different integrations that businesses can take advantage of.

Last week, I wrote about Sail’s first integration with inventory specialist Stitch Labs (see disclosure below). Now, Sail is offering more third-party services such as Xero and Outright for accounting, Push Point for marketing and local offers and OWN POS and POS Lavu for front-end point of sale applications.

The idea is to build out a showcase for third-party services so business owners can plug in whatever tools they need to augment their mobile payment systems. VeriFone is hoping that will become a selling point for Sail over other mobile payment rivals like Square, which are not open to third-party services.

Disclosure: Stitch Labs is backed by True Ventures, an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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The first integration for Sail is with Stitch Labs (see disclosure below), which provides online sellers with a software-as-a-service inventory management system that also handles analytics, orders, shipping and contacts. Users of Sail will now be able to tie their mobile sales in the real world to their online sales, so the inventory counts will be organized through one system.

That’s helpful for online sellers on Etsy, Shopify and BigCommerce, many of whom currently use Stitch Labs to keep track of their inventory. Previously, when they sold products to consumers at fairs or other offline settings using some mobile payment acceptance tools, there was no easy way to merge their inventory data. They often had to subtract what they sold offline by hand.

The Stitch Labs integration is just the first of many other partnerships to come. Other developers and service providers can offer their services to Sail users using the Sail SDK. Unlike Square, which is currently trying to build out a suite of services for small business owners — everything from offers, loyalty, analytics, inventory and marketing — VeriFone is betting that it can be more useful to customers if it can be open and incorporate a range of services from other providers. Other services on the way include offers, marketing and accounting. Eventually, the services will be organized into an app store-like gallery that customers can use to plug in the necessary tools for their mobile payment system.

Brian Hamilton, vice president of SMB Commerce at VeriFone, told me that the value of Sail’s approach will continue to emerge as more companies, small businesses and developers see how easy it is to plug in Sail and get a variety of services from different providers.

“We won’t be the best at everything. Our approach is there are best of breed solutions out there. We don’t want to rebuild that,” said Hamilton said.

If VeriFone can build up its library of third-party services available through Sail, it could become a viable competitor in the mobile payment space and an alternative to Square, Braintree and Stripe. But it will need to attract a full suite of services and will have to make it easy for customers to integrate these tools into Sail.

Disclosure: Stitch Labs is backed by True Ventures, an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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VeriFone is also making it easy for customers who want more traditional point-of-sale hardware to order an NFC-equipped VX520 countertop swipe terminal with receipt printer. Users can order the hardware directly from the SAIL online portal. The terminal is available for $100 a month with a $15 monthly fee.

The hardware helps VeriFone appeal to merchants who do more transaction volume. And it also gives VeriFone an answer to Square Register, Square’s iPad app. Square has also enabled its apps to integrate with popular brand of receipt printers and a register. SAIL currently is not designed to work on tablets.

VeriFone is still playing catch up but it continues to look toward its open approach as a competitive advantage. It’s working with a number of partners to integrate third-party services such as loyalty, CRM and social tools into its platform using open APIs. Brian Hamilton, vice president of SMB Commerce at VeriFone said the company will be sharing the first of these integrations next month. VeriFone also has a SAIL mobile software development kit so developers can include SAIL services in their apps. He said that will help VeriFone in the battle for merchants who want more than what Square is currently offering.

“You’ve got to be prepared to play nicely with the existing ecosystem and that’s what we want to be,” Hamilton said. “I don’t think Square can affectively do it all themselves as they move up market.”

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But as a small business owner who processes credit cards, ultimately I care about how well the device and service performs and enhances my business. I’m delighted the field is opening up a bit and hope to see a feature race between the two companies. After comparing the services from a variety of angles, I’ll probably be sticking with Square for most transactions with my iPhone and iPad.

Here’s what I found when I compared Square and Sail head-to-head.

Device ergonomics

In the few weeks I’ve used both devices, I’ve found the Square reader to be simply more portable. It fit into the coin pocket of my jeans on my service clipboard. The Sail reader’s stabilizing “sail” limited its portability. In my pocket the plastic jabbed into my thigh and it was simply too big to fit in the coin pocket in my service clipboard. Additionally, the Sail reader worked with fewer external cases due to that stabilizing plastic, while the Square reader fits more iPhones.

That stabilizing plastic was a helpful feature when actually swiping the card. Anyone who’s used Square’s reader knows it takes some finesse to hold the reader and get a proper scan without the dreaded “retry.” Movement of the reader during a swipe requires another swipe which slows you down as a merchant and annoys your customer. Sail swiped right each and every time because the reader didn’t move.

Cost

Sail advertises a lower cost per transaction of 2.7 percent compared with Square’s 2.75 percent. Sail on the surface is a better value, but Sail’s Go Plan charges 3.7 percent for American Express while Square’s flat pricing stays the same. If you accept American Express often, then Square is clearly a better value.

If you type the card number rather than swipe (because the customer doesn’t have the card, or it doesn’t read), then Square’s rate is 3.5 percent plus a 15 cent transaction fee. Sail’s rate is higher here at 3.7 percent for all cards, including American Express, but no transaction fee.

Sail offers a ProPlan for $9.95, which reduces the rate to 1.95 percent for swiped transactions and 2.95 percent for keyed-in transactions as well as 2.95 percent for all American Express, both keyed and swiped. Unless you average over $13,500 $1,350 in swiped sales a month, the Go Plan is a better value.

Because I see quite a few American Express cards Sail’s surcharge makes it unattractive for me.

The iOS App

The Sail payment app is currently iPhone-only, though it works on the iPad. The Sail app was confusing to me; in particular, to add an item to an order I had to click on the amount of the order rather than the list on the left side of the app screen. The “Sail” icon in the upper right was to change payment methods. None of these were intuitive for me.

I also didn’t like the annoying warning that the device needs to be connected each time I open the app.

By comparison, the Square app on the iPad is full screen and includes the ability to sell individual menu or inventory items, but the iPhone Square app only allows you to describe an item and not select multiple items for sale.

Sail allows you to add inventory items and even use a bar code scanner via your iPhone 4, a feature lacking in all versions of the Square app.

Square’s iPhone and iPad app interface puts everything you need on that front screen and for me was easier to use

Support

As of this writing, Sail’s main competitive advantage is its network of support. Square offers support primarily through email and occasionally via Twitter. The times I have contacted Square, I’ve had to wait a few days for a response, but fortunately these were non-urgent issues.

Sail has an actual phone number and U.S.-based reps I can call for support anytime. During my review I called them twice. Both times my call was responded to quickly though support had trouble answering the most basic of questions, such as “Am I charged for a refund?” That question required multiple periods on hold and a call-back to tell me, no, I’m not charged when I refund a customer. My previous merchant account did charge me for refunds. As far as Twitter support goes, my tweet to the @sailpay account was answered within 90 minutes.

Since I am rather tech-savvy and have been taking credit cards for eight years through my small business, I don’t have many questions. New business owners, or at least those new to credit cards, might appreciate live phone support.

Reporting and receipts

On credit card statements, Square merchants have an “SQ” in front of their name while Sail merchants get the full business name on the statement. That’s a big feature for me as a business owner as it keeps my branding consistent and could reduce chargebacks if a customer doesn’t recognize what the SQ means.

Square tends to protect customer information more than Sail does in the reporting, which is ironic given Verifone’s initial concerns about security. Square’s online statement only includes the last four digits of the cardholder’s account while Sail told me the full name of the cardholder. This was very handy to help me reconcile my invoices with payments.

Both Square and Sail include GPS coordinates on the transaction and receipt and will not allow you to process a card unless this is on. Square has the bonus feature of sending the receipt via SMS.

Establishing an account

Set up experiences were nearly identical. I went online with Sail and created an account and requested a reader. New Square customers can do that or purchase one directly from Apple and get the cost of the reader rebated to their merchant account.

Neither service required a credit check, but did ask some verification questions. Business owners like myself who don’t want a credit check done (and potential ding to their valuable credit rating) will appreciate this feature. When I attempted to sign up for Intuit’s GoPayment service, they required a credit check and I wasn’t willing to unfreeze my protected credit to test out their service.

Both Sail and Square require bank account information for direct deposit payments. They’ll make a small series of deposits as sa test so they know they’ve got the right account which they’ll withdraw once you verify the deposit.

Square’s reader is generic and can be used for any account while Sail’s reader is serialized and directly associated with my account and can be deactivated if lost or stolen.

Bonus features

Both Sail and Square have some added features that may be of particular value to business owners, depending on the situation.

Square has the “Pay with Square” app that allows a customer to conveniently open up a tab and pay without having to swipe their card, though this isn’t true NFC. I’ve only used it a few times, but it is both fun and handy to walk in and pay by saying “put it on my tab.”

Verifone is focused more on features for the business owner and will allow the owner to upgrade to a full-fledged card reader (and NFC capabilities) with the VX520 card reader that has been announced but not released.

Conclusion

Square’s polished app along with the lower charges for American Express and the ease of carrying around its reader makes it my preferred way to accept credit cards. Square’s hip image is also a factor as they feel to me like they’re closely aligned with Apple’s branding. Sail seems, well, more “PC” in its approach. Businesses starting out and those who have cost as their bottom line concern might prefer Sail.

Other business owners that don’t accept American Express or have large monthly transaction value will find Sail’s ProPlan a nice middle ground before getting a full merchant account that often requires a contract and pesky PCI compliance fees. I’ll use the Sailpay at my office since portability isn’t an issue and I’ll keep using both for a while just so I can keep an eye on any changes in features or quality.

You might wonder why I didn’t include PayPal’s Here. Simple: for me it isn’t “here.” I applied the day Ryan’s article came out and I have yet to hear from them. They are more focused on large merchants, it appears, rather than small businesses. If and when I get a Here reader, I’ll be sure to report my findings.

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Square is by now used to watching a parade of established payment companies try to duplicate its mobile payment system, including most recently VeriFone, which rolled out its SAIL platform earlier this month. However, while VeriFone’s actual credit-card swipe reader doesn’t look like Square’s dongle, it’s pretty clear Verifone used Square as a blueprint for its own service, going as far as to lift much of the language in its legal user agreement directly from Square’s merchant user agreement.

When I notified VeriFone that wholesale portions of its user agreement had been copied from Square on Tuesday afternoon, the company promptly deleted about a third of its user agreement – including most of the offending text. The SAIL agreement went from 10,525 words and 43 sections to 6,452 words and 25 sections, with a couple mistakenly numbered twice. This is the statement VeriFone released to me on Tuesday night:

Thank you for bringing this to our attention.  While many legal documents tend to use and reuse industry-acceptable language, we took your feedback into consideration and have made revisions to the agreement so that there is no misunderstanding.

More than just boilerplate language

SAIL’s user agreement, however, did more than reuse “industry-acceptable language.” More than half of the sentences at the heart of the user agreement were lifted directly from Square’s legal agreement with almost no alterations. It swapped out all the references to Square and included some original language. And some of the sentences and sections were moved around. But the language was a word-for-word match in numerous sections, including one stretch of more than a dozen sections that were taken directly from Square.

Here’s an example. From Square’s merchant agreement:

18. Square Account History – When a payment is made to your Square Account, we will update your Square Account activity on the website and provide you a transaction confirmation. The confirmation will serve as your receipt. Summaries of your Square Account activity, including monthly statements, are available on our website for up to one year of account activity. Except as required by law, you are solely responsible for (a) compiling and retaining permanent records of all transactions and other data associated with your Square Account and your use of the Services, and (b) reconciling all transactional information that is associated with your Square Account. If you believe that there is an error or unauthorized transaction activity is associated with your Square Account, you agree to contact us immediately.

Here’s the same passage in SAIL’s original agreement. You can see a preserved version here.

XIV. SAIL Account History – When a payment is made to your Sail Account, we will update your Sail Account activity on the website and provide you a transaction confirmation. The confirmation will serve as your receipt. Summaries of your Sail Account activity, including monthly statements, are available on our website for up to one year of account activity. Except as required by law, you are solely responsible for (a) compiling and retaining permanent records of all transactions and other data associated with your Sail Account and your use of the Service, and (b) reconciling all transactional information that is associated with your Sail Account. If you believe that there is an error or unauthorized transaction activity is associated with your Sail Account, you agree to contact us immediately.

SAIL’s website also bears a resemblance to Square’s

This was repeated throughout SAIL’s user agreement, but following my inquiry, this section and others that took directly from Square’s document were removed from VeriFone’s website. The wholesale copying shows just how much SAIL’s processes and features were built with Square in mind. For example, SAIL, like Square, was requiring merchants to offer a written receipt for any transaction of more than $15. Square, of course, has a number of competitors such as PayPal, PayAnywhere and Intuit, but they all have their own legal agreements for their mobile payment products that do not reuse Square’s language or replicate the exact same policies.

Square concerned about copyright issues

Square is still deciding what it wants to do, but it said it believed copyright issues were raised with VeriFone’s user agreement.

“When we said that Square made it easy to swipe, we meant credit cards,” said Square spokesperson Aaron Zamost.

Sean Kane, a member of law firm Pillsbury’s social media, entertainment and technology team, said a company caught copying another firm’s legal user agreements or terms of service could be sued for copyright infringement. But that is rarely pursued when it comes to terms of service and user agreements. It is still an issue, said Kane, because companies who copy a user agreement or TOS could be accused of fraud if their service actually differs from the user document. That could be a problem now for VeriFone, which now has a slimmed-down user agreement that doesn’t address many key points about the service.

A unique user agreement can also help defend against larger claims of infringement or DMCA violations by other companies. At the very least, he said, copying a company’s TOS  can leave a stain on an offending company.

“Just because a big company is doing something similar doesn’t mean you should copy their terms of service,” Kane said.

The incident highlights the increasing competition in the mobile payments space as larger companies such as PayPal, VeriFone and Intuit take aim at the fast growth of Square. Square recently announced it was now processing $5 billion on an annualized rate and was rumored to be raising $250 million at a valuation of up to $4 billion. In the past month VeriFone and PayPal have rolled out their answers to Square, but it remains to be seen if they can cut into Square’s growth. For now, it looks like VeriFone is rethinking just how closely it wants to follow Square’s example. Imitation is not necessarily the sincerest form of flattery when legal documents are involved.

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