Payleven recently hit the news with its Square-syle mobile payments service for the European market. Like iZettle and Square itself, Payleven allows users of iOS and Android phones to use their devices to accept card payments in person. So are we now at the point where we have pan-European mobile payments? Well, not quite and here’s why:
The first thing to clarify is that turning your phone into a payment terminal does not fall within the strictest definition of a mobile payment. What you’re doing is allowing your phone to act as a temporary Point of Sale terminal which you can then carry around to accept payments by debit or credit card. Sure, you can bring the terminal with you wherever you go but, when the transaction actually takes place, it’s just an everyday retail payment. In other words, it’s not actually a mobile-originated payment transaction. That’s not to say it’s a bad thing. On the plus side, what this does is allow more people and a more diverse group of businesses to accept payments without being tied to a retail location. It also makes the transaction a lot more secure. But, when the payment happens, it’s a standard “customer present, card present” transaction and not a “mobile to mobile payment”.
This distinction throws up some interesting challenges. If you’re a business that wants to take payments using your iPhone at random locations around Europe (let’s say you’re on the summer festival circuit), you will want to be able to accept cards in different countries ideally with a single merchant account. So will these services work for you? Well, because the transactions are “card present” they don’t benefit from the freedom of true Internet and mobile payments. iZettle and Payleven front up a payment service which also requires you to sign up to a merchant account with an acquiring bank or processor such as Elavon. The payment service provider is obliged to processes the transaction as a local “card present” transaction. This means the service has to be confined to the the country where you have the agreement with the service provider unlike a mobile-originated or a card-not-present Internet transaction which are effectively “borderless”. The result of this distinction is that you’ll need to have a merchant account for each country in which you are accepting transactions. You can’t – yet – get a single multi-country roaming merchant acquiring service, so you will probably need a separate service contract and a separate merchant account for each country.
There’s no doubt the industry will work to reduce the administrative overhead and these problems should be resolvable. Similarly, although the current providers are expanding, they are not truly pan-European just yet. Payleven’s current offering supports Germany, Italy, the Netherlands, Poland and the UK. iZettle is available in Norway, Denmark, Finland, the UK, Spain and Germany. iZettle has also experienced teething problems with Visa card acceptance in the Nordics. There’s more work to be done here to get complete coverage across Europe.
There is an alternative we should mention but it’s not perfect either. You can choose to take payments as if they were an internet transaction using something like PayPal. The reason this is not an ideal solution is because you want the payment experience to be as straightforward and “normal” as possible. The consumer would need to hand over their card and then have it keyed in rather than swiped or inserted so this makes the payment less seamless (and also less “normal”) as well as not benefitting from PIN-based security.
So if you want to be a roving pan-European merchant in the least complex way possible today you should be able to get going with one of these services, depending on the scope of your business. But the simple straightforward service promised as a result of EU payments integration isn’t really available just yet. Despite recent innovations and the push at a regulatory level to harmonise payments across European borders within the EU internal market (so that an international transaction is treated just like a domestic transaction), the reality for the merchant on the ground is that there are still a number of barriers that the payments industry hasn’t yet overcome. However, we expect (well, ok, we hope!) the industry will catch up fast and start offering a more seamless service in Europe very soon.