John Mayleben Blog

My last column focused on recent and coming changes in the size, shape and look of the credit cards you handle as a merchant. Now let’s take a closer look at another big change: a new and highly portable way to process some card transactions.

With the growth of the “smartphone” marketplace, we are seeing more and more merchant processing solutions oriented toward merchants who could benefit from turning their phones into credit card terminals.

Michigan Retailers Association, as one of the nation’s oldest non-bank solution providers in the merchant processing arena, is always looking for ways to help our members speed up the transaction process and save money. That’s why we’ve checked out what’s available and have come up with the best smartphone solution for our members, one that saves them time and money.

More about that in a moment. But first, some background.

Years ago, the card associations (Visa, MasterCard) and their issuing banks established a tiered pricing model that, for security reasons, penalized merchants who weren’t able to swipe a card. In some cases (towing, deliveries, outside salespeople), the merchant or the employee had the card in hand but not at the same time as there was access to a terminal.

Those merchants ended up paying a higher rate for a transaction that really was “face-to-face.” Most of those cases involved calling back to the home office for an “approval” number or taking the chance that an approval could be secured at a later time. The problem was, the first dramatically increased the time of the transaction, and the second created risk to the merchant.

A number of years ago, terminal manufacturers designed terminals that had cellular modems. But they were expensive and designed to be single function devices. While some merchants saw value in these units, many did not.

Now, with the increasing number of smart phones in use and the dawn of the “app store” for distributing software, a successful alternative has been created.

We are now able to use a magstripe reader that slides onto your iPhone (3G, 3GS, or 4) and that, with the accompanying software, allows you to process a swipe transaction, collect a digital signature, and email the receipt to the customer.

In addition, you have access to a “virtual” terminal from any computer that can get you to the Internet in order to process other transactions (credits, voids, etc.) and run reports.

We’re excited about this new technology as a way to help our members increase their capabilities, boost efficiency and reduce costs.

To see a demonstration of this new solution, please contact your Michigan Retailers Association regional marketing representative. Your rep can discuss or demonstrate how the equipment and software work and the benefits to your specific business.

John Mayleben is Michigan Retailers Association senior vice president, technology and product development, and a national expert on electronic payment processing.