Small Business Technology turns cell phones into cash registers

By Claude Solnik

The Daily Record Newswire

LONG ISLAND - Peter Arzoumanidis, a personal trainer who owns Workout Anywhere in Woodbury, used to accept only cash and checks, even if most of the world shifted to electronic payment.

But these days he processes credit cards thanks to a device that turns his cell phone into a cash register in more ways than one.

As financial transactions increasingly go electronic, devices such as Square, a small, white credit and debit card reader, are letting small businesses process credit cards without new equipment.

Square, co-founded and led by Twitter co-founder Jack Dorsey, lets businesses plug a small square into their headphone jack.

Instead of music, it provides the sweet sound of money, by processing credit and debit cards, often leading to bigger and faster transactions.

"It allows me to accept payment from people who don't have cash on hand or check," Arzoumanidis said. "Sometimes they like to accumulate points or miles. That's a benefit for them."

While Square has become possibly the best known way of putting plastic on your phone, it's not the only one.

PayPal Here lets companies attach a small black triangle to smart phones and Intuit's GoPayment reader does the same, while linking transactions to QuickBooks.

But Square, which debuted its product in 2010, has become a major player for small businesses seeking an easy way to go electronic.

"People don't carry cash," said Mark Licker, owner of Mark's Ice Cream, a truck that two months ago began using Square. "Everybody under 20 doesn't carry cash."

Square, which bills itself as "the pocket-size point-of-sale system," is proof that serial entrepreneurs sometimes strike it big more than once in tech.

Following the success of Twitter, Dorsey co-founded the firm in 2009 in San Francisco. Square's product debuted the next year and today is available in the United States, Canada and Japan.

"We started with a simple idea - that everyone should be able to accept credit cards and we've been rethinking buying and selling ever since," Square said in a written statement.

Millions of businesses today accept payments through Square, which Licker believes can grow his sales between 5 and 8 percent.

"Instead of digging in their car to find change, they buy something," Licker said, noting orders are often far bigger thanks to credit.

Square lets workers in the home from repairs to personal services, food carts, professionals and traditional businesses process credit card transactions.

Even people at fairs can easily swipe credit and debit cards without equipment fees.

Arzoumanidis posted stickers on his iPod and home studio gym, saying he accepts Square payments. Licker proudly displays signs saying he accepts credit cards.

"For service industries where you're on the go, like a plumber or air conditioning, they can bill you onsite at your home," Arzoumanidis continued.

Square charges 2.75 percent per swipe for Visa, MasterCard, Discover and American Express and 3.5 percent plus 15 cents per transaction if you manually enter information.

The firm doesn't charge monthly fees, minimums, setup costs or variable percentages, standard practice with credit card processors.

PayPal charges only 2.7 percent or 3.5 percent plus 15 cents for transactions that are keyed in manually.

And Intuit's GoPayment reader charges 2.4 percent plus 25 cents per transaction or 3.4 percent plus 25 cents if you key in transactions, with special arrangements available based on volume.

Money through Square is deposited in bank accounts in one to two days. If there's no signal, users can swipe payments that are processed once there's a signal.

"It allows you to use it even if you're not in a place with Wi-Fi," Arzoumanidis said. "You can swipe the card and put it on offline mode. Then when you're in an area with Internet, it processes."

Square also brands digital receipts for companies, letting them market while they confirm transactions.

"That's great. It keeps track of it," Arzoumanidis said. "It sends a nice, formal email and allows me to put on my logo. They can sign for the charge on my phone with their fingertips."

While Square helps with small-ticket items, it can also lead to much bigger sales for costly services.

"I have one client whose aunt in Florida pays for the service," Arzoumanidis said. "I would have had to get checks from Florida. I wouldn't have closed that deal that day if I couldn't say, 'Give me the credit card information and enter it in.'"

Companies can even get customer feedback and, Square says, resolve issues before they become bad online reviews.

The Square dashboard lets company owners view new customers, sales per item, average customer spending, top items by sales, payment types and staff sales summaries.

But even if Square can boost sales, it creates a clear, electronic trail.

"I pay taxes on what I take in," Licker said. "So it's no different. If you're hiding a lot of money, you may not want to use this."

Other technologies including Apple Pay or versions of Google Wallet also could supplant these processors, by letting vendors process transactions directly through cell phones.

And even if credit card readers can boost revenue, they're only being used by a small fraction of businesses.

"Most of them are old-fashioned," Licker said of ice cream truck vendors' reluctance to use credit card readers. "They're afraid of it."

Arzoumanidis said even if charges are low, they're steeper than costs for checks and old-fashioned cash.

"We prefer cash or check, because they do take a fee," he said. "But being able to get a payment from somebody who wouldn't be able to pay otherwise is equally important."

Published: Fri, Jul 03, 2015

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