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Credit Card Processing Apps: Smartphones Get Smarter

Credit Cards
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This is a guest post from Kenny Kraisornkowit, who offers shopping advice, product reviews and ways to save money on tech gear and gadgets at Savoo, the U.K.-based version of the popular deal site, Savings.com.

Let’s say that you’re hosting a garage sale to get rid of all the junk in your house. A random passerby notices that you have that Nintendo he’s been looking for on sale, priced at a very reasonable $30. Unfortunately, he’s only got $15 in cash on him, and you’re nowhere near an ATM. What do you do?

As recently as five years ago, you would have either:

a)   Begrudgingly accepted his $15 because hey, that’s still better than $0, or
b)   Held onto the Nintendo and gamble that someone else will come by with a better offer.

Fortunately, the wonders of modern technology have rendered such conundrums obsolete. There are a number of smartphone apps for both the iPhone and Android that allow you to do everything from paying for goods to transferring money and even accepting credit card payments. Here’s a look at a few of the best credit card apps,.

Square

Perhaps the best known payment app, Square allows you to accept credit card payments from others, using only the eponymous card reader that attaches to your phone’s headphone jack. All that’s required of you is that you download the app from the Apple App Store or Android Market free of charge or create an account on their site, and Square will ship you a free Square card reader.

Among the features the Square app offers are analytics that allow you to track sales and statistics, the ability to easily collect tax and tips on payments made through the app, and even sending electronic receipts via email or text message. The receipt sent to the customer includes a plethora of useful information, including (obviously) the amount paid, the name of the item, an image of it, and even the GPS location of where the purchase took place.

Of course, all of this comes with a caveat: the company collects 2.75% of payments made with any of the major credit cards, and 3.5% + $0.15 if you enter in the credit card number instead of swiping. Of course, with no monthly fees, or contracts to sign, this is a relatively inexpensive price to pay for the kind of convenience Square offers.

Pay Anywhere

Much like Square, Pay Anywhere allows you to receive payments by swiping credit and debit cards through a reader attached to your smartphone. And, also like Square, both the app and credit card reader are free upon creating an account. Likewise, analytics options, email receipts, and tax/tip settings are also available. So what’s the difference?

For most merchants, the bulk of the difference will lie in the pricing structure. Like Square, Pay Anywhere takes a percentage of the payment made to you, slightly lower than Square’s at 2.69% for swiped payments and 3.49% for keyed in ones. However, the flat per-transaction fee is a bit higher at $0.19.

Although their pricing structures are quite similar upon first glance, the difference between each of the two can add up quickly, depending on how much your transactions are on average and what payment method you plan to use. The break-even point for swiped cards is around $67: Pay Anywhere is the better choice if your average swiped card transaction is greater than that amount. The break-even point for manually entered card numbers is quite a bit higher, at around $400.

If you’re generally going to be accepting smaller payments or will manually enter most of your card numbers, Square is probably going to be the better option. Since you’re using a mobile payment system, you probably have pretty small transactions. Pay Anywhere’s transaction fees are simply too high, comparatively. And, if it makes a difference, Square’s card reader is more aesthetically pleasing.

Intuit GoPayment

Like the others on this list, Intuit’s GoPayment allows you to process transactions by using a card reader attached to your mobile phone. However, where it diverges from the other two is the pricing structure. Both Square and Pay Anywhere have relatively simple pricing structures–regardless of the volume or amount of your transactions, you simply make the same payment per transaction plus any fees associated with each. The fee charged on the first Nintendo sold would be the same as the fee for the thousandth.

Intuit GoPayment, conversely, offers two separate pricing schemes you can choose from depending on how much you sell in a month. Their low-volume pricing scheme is similar to Square’s and Pay Anywhere’s, in that you pay a set percentage (2.70% for swiped transactions, 3.70% for manually keyed in ones) per transaction, with no monthly fee. Their second pricing option is intended for businesses that process more than $1,000 a month. In the high-volume plan, per-transaction fees are reduced considerably (1.70% and 2.70% for swiped and keyed, respectively), but users must pay a $12.95 monthly fee.

For those who are adamant about keeping their card reader with them at the appropriate times or make large amounts of sales, Intuit’s GoPayment is likely the best option. Their competitive 2.70% rate undercuts Square just enough to make it worthwhile, while the lack of transaction fees make it a clear winner when compared to Pay Anywhere. Furthermore, their high-volume plan means that sellers can cut costs when selling in larger volumes. However, the steep rates for keyed cards make GoPayment less than ideal for those who forgo their keypads.

Regardless of the amount you sell, chances are there’s a payment processing system that fits your needs offering whatever flexibility you require.