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Giacomo Balli
The Mobile Guy

Over two decades of experience at your service.
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Mobile Payments in Apps - What are the options?

Black AmexGetting paid has always been a priority in any business. Nowadays that customers are more "spoiled" than every, you have to make it extremely easy for them to send you money. Mobile payments is a big thing right now with many companies, including the big names, trying to understand which way is best. It's great to see that also many startups stepped up into this industry with their new concepts and are actually turning out to be true competitors to the giants (GoGiants!, by the way). mobile moneyI make iOS (iPhone & iPad) apps so this is my field of expertise. I have to admit I was never thrilled about the whole mobile wallet concept. It is way to soon for it. This doesn't mean we won't get there, just that there are intermediate steps that are necessary in order to allow the mass mentality (and trust) to adapt/shift. Focusing on iPhone apps and not having actual products that I sell, I have always used Apple's inapp purchase system which I find simply awesome. Easy to set up, effortless to use (revenue gets added to sales report in iTunes Connect) and amazing conversion rate (everyone can pay you, with one tap!). Apple wants its fair cut only if what is being purchased will be "used" within the app. This sounds perfectly acceptable to me since they're making it extremely easy for us. However, this leaves a whole chunk of "free market" where any company can tap into: payments using a mobile device for "things" outside the app. Since there hasn't been anyone claiming this space, currently most payments are within an app and therefore using Apple InApp purchase. However, it seems clear that the cases of use are many more for "external" purchases which makes this an extremely tempting sector, you just have to get it right... ;) Among the various companies that are trying to make a difference with their service, I believe there are mainly four players/kinds you should currently consider.
[caption id="" align="alignright" width="147"]Donate with PayPal Do the right thing, click above... ;)[/caption]
  Paypal This is the first payment gateway most people think about. Paypal is the dinosaur that everyone knows. If you have ever bought something online, odds are you have a paypal account. Paypal (now under eBay for quite some time) has been growing rapidly and constantly as the latest quarter results show. Their API and SDK are notorious among developers for being quite hard to implement and trouble-shoot. This is true initially but after you get the idea of the process they want you to follow it all "makes sense" and turn out quite straightforward. There are various options you can use, including carts, quantities, discounts, invoicing etc which make it a great suite for mobile payment. The fees for receiving payments are usually 2.9% plus $0.30 per transaction but there are different tiers you might be eligible for.
The strength of Paypal is certainly it's "size" and being trustworthy. Keep this aspect in mind, it's also interesting to notice that even Google (Google Checkout) and Amazon (Amazon Payment) offer pretty much the same basic credit card linked to an account process (the even use the exact same transaction fees) but are way behind. I feel like they haven't been as invested in this branch of business. stripeStripe
Is the classic example of successful startup. Based in San Francisco, CA, they noticed both a non-ideal way of doing things with some good potential for revenue. The whole idea of what they offer is making it easy for everyone to receive payments with a credit card. Everything is processed on their servers therefore you do not need to worry about privacy and special practices (common for e-comemrce). Unfortunately it's not available in all countries but they're adding new ones continuously. They also recently implemented recurring billing (for subscriptions). The big success was making things extremely simple on the implementation side, the only drawback is that people might rather user their accounts rather than typing in their credit card info. The fees for use follow industry standard 2.9% plus $0.30 per transaction.
Stripe is currently unavailable in Europe. If you're interested in this form of payment, you might want to look into recently launched PayMill.
  Braintree In a nutshell, Braintree requires customers to have a merchant account (Braintree will help customers obtain one if they so desire). Braintree also offers a wider range of services, analytics and hand-holding for their customers. Some of its services include: Read more about it on TechCrunch.
The above companies are all great options when you want the user to make the payment (ie inputting login credentials or credit card number). However, there are also cases where you want to be the one collecting payments (classic scenario is paying for a cab ride). This is the niche that Square picked up on and decide to serve (smart guy Jack Dorsey was involved, heard of Twitter?). Their way of operating is different from above. They pair a specifically designed dongle (reader) and a native app where the transactions gets set up, client signs and it gets processed. Pricing is slightly different, they will only charge a  2.75% of the transaction amount. They also recently introduced a new plan: 275$ per month regardless of number and volume of transactions. This could be AMAZING if you have solid credit card revenues.
Paypal definitely realised how this was an extremely smart move and decided to join the game and compete by introducing their own PayPal Here. Same concept but with slightly different price: 2.7% of transaction.
[caption id="" align="alignright" width="154"] Charge a credit card by simply snapping a picture.[/caption]
I recently came across a very interesting spinoff of this system called
What's makes stand out is the fact that rather than actually swiping the card (and therefore needing some kind of additional external device), you simply take a picture of it and it gets processed. Everything is on the fly so no privacy issues. I like it!
  Dwolla Dwolla
All the options we've talked about focus on payments from credit cards. Dwolla instead focuses more on the actual transfer of funds between people, backed up by the actual bank accounts (they call it "cash based payment network"). You can find more details on how it works here. One big drawback is definitely adoption. In order for it to become "big" and actually compete with the top players, many people need to believe in it since it's competitive advantage (ie niche addressed) is a little weak. However, the great perk is its fee: free to use (or almost): you pay $0.25 when receiving over $10 in a transaction.
There are many ways for entrepreneurs to get paid nowadays that make use of modern technologies. They all have specific positive sides which should make picking one relatively easy once you have your revenue model and target demographic well laid out.
While you're at it, if you start making a good revenue with online sales, you might want to checkout It makes donating to charity institutions effortless. Every bit counts!
More related info on the industry by ComScore here.

#amazon payments, #dwolla, #google checkout, #inapp purchase, #mobile payment, #paypal, #square, #stripe
Published: Mon, Oct 29 2012 @ 14:02:59
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