Feature Stories
Banking on B2B Customers with a Pocket POS
by Sondra Sneed
Posted on Oct 22, 2008 - 11:23 AM — This page has been viewed 93 times •
When an airport cab driver had a Blackberry-based 'payment center' attached to his meter a few months ago, I watched in amazement as my name showed-up on the screen after he swiped my credit card. I hadn't seen anything like it yet and I didn't know how it worked. "How is he going to authorize that?" I wondered, "Will I sign his phone?" Next I heard the soft stutter of a tiny thermal printer pushing out my receipt. I signed it, added a tip, and scooted out the door. Later, my mind went back to what was my first ever mobile-based transaction. I began to imagine every number of small businesses that might need a similar system. Luckily the phone rang a week after with a story about a bank in California, which specialized in small to mid-size business relationships, and I learned that they have packaged the whole deal - hardware and all - coupled it with a merchant service account for resell. And the best part? Resellers are getting an awesome residual income opportunity in the deal.
The National Bank of California is a 25-year-old FDIC insured bank that has been quick to link available technology to their merchant services. They are calling it the Pocket POS, which comes packaged for businesses that need to take credit card payments in the field.
The equipment includes: an all-in-one, Blue Bamboo card swiper and thermal printer; a BlackBerry; card reader and authorization software installed; and a merchant services account through the bank. Resellers can lease the equipment to their customer and they make recurring commissions on every purchase made through the account.
Richard Harris is the Director for the Wireless Merchant Services department at the bank and is charged with bringing the program to wireless retailers. He says, "For a merchant who runs an average of $7,500 / month in credit card charges, the reseller makes about $1,500 in the sale to that merchant." The commission structure however, is not the only advantage to the wireless retailer.
"The equipment can be leased," says Harris, "so neither the retailer nor the merchant customer has to purchase the equipment. They can purchase it if they want to, of course, but we make the case that a lease is better for the reseller, and the merchant has a single monthly payment. It may cost a little more, depending on the lease agreement, but most resellers and their customer benefits from not having the up-front cost."
The Pocket POS can work either as an up sell to existing customers or as a value-add to attract new customers.
"It really is targeted to b2b resellers, but a consumer retailer may actually have a market that they haven't tapped yet as there are plenty of small business owners who come into their stores for personal or business cellular products." But a more important point to be made here says Harris, concerns the future of the independent retailer. "As voice and data become commoditized, like a utility, the services that are deployed through them will be the businesses of tomorrow. So the sooner the wireless retailer positions them self as a provider of those services, the sooner they can capitalize on the trend. One day when banks and wireless carriers converge, like they have in Japan, the customer will seek those financial services more and more from retail."
While that may seem a ways down the road, what is timely is the matter of credit card security. Harris says that banks and credit card companies are pushing these types of transactions now because they actually help cut down on fraud. "If you can physically swipe a card that never leaves the customer's sight, the more likely you are to maintain the security of that card. Each time a card leaves the customer's hand or the card number is written out in full, the more likely the number can be stolen and used in identity theft," Harris explains.
By 2010, he says Visa will be extremely strict about making sure a cardholder's number is truncated and that there is no record of the full number that can be found later. "There are already big fines for not being in compliance and fines can be as much as $10,000 per incident," he warns. But it also costs more for the merchant to key-in a customer's card manually, so it's less expensive to be able to swipe the card for digital data capture.
Another benefit to this product, says Harris, is that the National Bank of California can save the retailer money on their own merchant services account by becoming a dealer for the Pocket POS.
The website for the product and the bank's offering will be available in late fall 2008 or early 2009, but they are ready to do business before the marketing materials have been released.