Intuit today announced it has partnered with mophie, a long-time iPhone accessory maker, to turn Apple’s handset into a mobile credit card terminal. The hardware, available today, reads the magnetic strip of credit cards and processes payments through Intuit’s GoPayment service, which has processed more than $35 million in transactions since launching 18 months ago. Mophie’s design expertise combined with Apple’s hardware standards offer Intuit a wider opportunity in the growing mobile payment space.
When I first saw Intuit’s solution, I immediately thought of Square, Jack Dorsey’s similar solution for the iPhone that launched earlier this year. There are key differences between the two payment processing approaches however, as Intuit is clearly targeting small business transactions, while Square aims more at consumer micro-payments. That difference is most evident in cost: the mophie case is $179.99, while a Square reader is free but fees are higher. Businesses using GoPayment pay a competitive $0.30 to $0.34 for each transaction, plus a portion of the transaction amount, which ranges from 1.7 to 2.7 percent of each sale. By comparison, Square only charges a $0.15 transaction fee but 2.5 to 3.5 percent of the transaction amount.
Earlier today, I spoke with Mary Lunneborg, Intuit’s GoPayment senior product manager about the product and fee structure. Lunneborg didn’t detail what Intuit’s cut of the transaction fees are, but did explain how the simplicity of the pricing appeals to small business owners. “There are no setup or cancellation fees, just a $12.95 monthly fee,” she said. Lunneborg also pointed out that Intuit offers a complete merchant account solution that “underwrites the business and risk.”
Another value add is the integration brought to Intuit’s QuickBooks with the GoPayment system. Both QuickBooks for Mac and PC support transaction records from GoPayment, which will surely appeal to the more than 4 million users on QuickBooks today. Given such integration and simple pricing, it’s possible that some established or new small business owners might make this their only credit card solution, which is a plus in Intuit’s favor.
As far as the hardware goes, Intuit couldn’t have picked a better partner than mophie, based on my own use of other mophie products. The company has long made iPhone add-ons such as the Juice Pack, which is a hybrid case and extra battery for Apple’s iPhone. This afternoon, I asked Ross Howe, mophie’s VP of marketing, how the standardization of the iPhone is bringing opportunity for mophie.
“With Apple,” Howe said,”you can get an economy around your product and build around a standard life-cycle.” Indeed, having a standard handset with only one type of connector makes it easier for a company such as mophie to build an add-on case that will work with millions of devices. Conversely, unless Intuit can get mophie or another hardware maker to build a card reader that uses a micro USB port, the company is shut out of the fast growing market of Android users. And for now, the Intuit – mophie solution is limited to Apple’s iPhone 3G and 3GS — no iPhone 4 support as of yet, although it’s coming soon, as Howe jokingly told me, “We’re chasing Apple’s form factor.” Lunneborg chimed in that other platforms are under consideration for GoPayment and Bluetooth-enabled devices might be the solution around the varying connection issues.
Clearly, Intuit is gunning for a bigger slice of the mobile transactions space, estimated to hit more than half a trillion dollars by 2014. For as different as the new mobile GoPayment solution is from Square, however, it shares a common feature — a fight between everyone ranging from credit card companies with near-field communications solutions to cellular carriers and hopes for their own common payment standard in order to get a bigger piece of that mobile payment pie.
Related GigaOM Pro Research (subscription required): A Mobile Payments Glossary