Editorial Policy

5 Ways to Take Credit Card Payments with Your Smart Phone

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By Eva Norlyk Smith, Ph.D.
August 4, 2010

Back in the day, taking credit card payments required a merchant account (which could take up to four weeks and require two banks for approval), a clunky card reader, and hefty monthly fees. Today, however, piano teachers, iPhone-wielding babysitters, and even lemonade stand entrepreneurs can take instant credit cards payments on their smart phone, merchant account or not.

Several new apps and accessory gadgets offering on-the-go credit card transactions have recently hit the smart phone market, with a few more waiting in the wings. Here are some of the top credit card apps and readers available for iPhones, iPads, and Android phones:

Square Credit Card Reader. The brainchild of Twitter-creator Jack Dorsey, Square is a tiny, well, square device, which slips into your smart phone’s audio jack. Square may be small, but don’t let that fool you; this is one powerful little gadget accessory. Square enables users to take credit card payments not just on the iPhone and iPad platform, but for Android smart phones as well.

At the moment, those wishing to process credit cards can get their hands on the Square credit card reader for free simply by taking ten seconds to sign up for Square’s credit card processing service. Square is unique among smart phone credit card readers in that users do not need to have a merchant account set up, charges get processed through Square’s dedicated merchant account. At a 2.75 percent transaction fee along with an additional 15 cent transaction fee, the cost is comparable to other credit card processing services. In fact, it may seem like a steal when you consider the monthly fees, gateway fee, and transaction fees for traditional card swipe systems.

VeriFone Payware. Available for iPhone users, VeriFone’s Payware Mobile App works in tandem with a sleek, card-reading sleeve that fits snuggly around the iPhone and features a built in stylus for signature capture. The Payware Mobile app is available at the iTunes App Store, the credit card encryption sleeve is available through select VeriFone distributors.

The Payware Mobile App works in tandem with users’ own merchant account, so costs are in addition to any merchant account fees you’re already paying. Currently, users can expect to pay a one-time fee of $49 at sign-up, and then an additional $15/month over the course of the two-year agreement. Transaction charges run at 17 cents per swipe, plus any additional interchange fees applied by the card issuer.

InnerFence. For smart phone users who don’t mind entering in credit card numbers by hand, the InnerFence application offers both iPhone and Android users the ability to turn their smart phone into an instant credit card terminal. Device free, the software can be purchased from iTunes for a modest $.99 or downloaded for free by Android users. A service fee of $25 per month applies, along with a 2.09% to 3.97% transaction fee with an added 24 cent flat charge; special rates are available for non-profit organizations. Those who sign up for InnerFence’s service will be able to purchase a soon-to-be-released credit card swipe reader in the future, should the option appeal.

iMerchant Pro. iMerchant Pro is another device-free iPhone and iPad app, which enables users to turn their smart phone into a credit card point-of-sale terminal and enter credit card data for quick, five-second approval processing. You need a merchant account, but it is possible to apply for one when you sign up for iMerchant Pro. The credit card reading app is a available on the iTunes App Store for $0.99, but using the service costs $29.95/month. The service is a good deal for a family or businesses with multiple users; the account can be installed on up to five phones at no additional cost. Transaction fees weigh in at 2.09% plus 19 cents, but may be lowered when the card’s CVV number and billing address details are entered in. A dedicated credit card reader to work with the iMerchant Pro App is in the works.

Simply Swipe It. Like the above, Simply Swipe It allows iPhone and iTouch users with merchant accounts to take credit cards using their iPhone or iTouch. The app is free, but users pay a $20 gateway fee, along side an extra 15 cents per transaction and a one-time $15 set-up fee. For those who prefer not to enter numbers, the company also offers the Swipe It Reader; however, at $149, the hardware option may not be worth it unless you plan to process a lot of credit cards.
Users without a merchant payment system are offered the option of working with Axia, which charges 1.79-2.19% plus 20 cents per transaction, along with a $9.95 monthly fee, $25 annual fee, and a $15 account set-up.