Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

This report has added 9 new players to the

MPOS Pyramid™ and offered new insight

into the range of players and services

entering the space.

The big takeaway: Value is taking the form

of bundled solutions.

Solutions that come bundled with segment

appropriate hardware and software make

it easy for SMBs to purchase, operate and

easy for the services provider to support.

The February 2013 MPOS Tracker™

If the big takeway in January’s report was that value-added was in, the big takeaway in February is

that an awful lot of that value is taking the form of bundled solutions that make it easy for merchants

to buy.

February 2013’s report features nine new players to the

MPOS Pyramid, including one “powered by” supplier.

The new merchant facing players are Circle it Up, Cube,

Miura Shuttle, MTS, Nedbank, Payfirma, Revel Systems

and YES Bank. The one powered by supplier is

Payworks.

In addition, we’ve updated quite a few players from

prior months. They include the following eight

merchant facing players: iZettle, KWI Cloud 9, mPowa,

Shopkeep, SumUp, Square, Payleven and PayPal Here,

as well as one powered by supplier, ROAM.

Key MPOS Insights | February

Keep it simple. The small business market is time, people and money challenged. Solutions that

come bundled with segment appropriate hardware and software make it easy for SMBs to purchase

and operate, and easy for the services provider to support. The pricing associated with these

bundles are also easy for SMBs to budget for and pay. This trend is seen with both tablet/register

solutions and phone/dongle solutions.

Distribution is the flip side of stickiness. Payments is a scale business where timely distribution is

critical to ignition and ignition is critical to success. Getting to SMBs is a challenge, which is still

where the bulk of the MPOS efforts are focused today. Partnerships between players with SMB

relationships and MPOS assets extend the reach for the latter while creating additional functionality

and stickiness for the former. This “two-fer” is driving a lot of the partnership activity in the space.

A Monthly Update on the State of the Mobile Point of Sale

Ecosystem

A PYMNTS.com Report Sponsored by ROAM

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

This monthly MPOS TrackerTM is

intended to give the payments space a

“playbook” on MPOS – a sort of “who’s

on first” perspective of who’s in, what

their offerings are, and how the market

may have shifted month to month.

We’ll comment on who’s moved or

entered the space each time we update

this report.

Standards and best practices rule. At Mobile World Congress, MasterCard and Visa both announced

certification programs that provide some best practices and certification standards for MPOS

solution providers. These programs are designed to create some minimum standards in important

areas like security in an effort to raise the bar for the new players entering the space and provide

some assurances to the SMBs who have likely never accepted cards that the solutions they will be

using meet a minimum acceptable standard. This space, in particular, will be interesting to watch.

The MPOS Organizing Methodology: The MPOS TrackerTM Pyramid

The organizing framework for this new ecosystem is the MPOS PYRAMID™. It’s a graphic representation

of where we think merchant facing service providers fit in the market. As stated earlier, it’s not designed

to suggest that one part of the pyramid is better than another; but rather to depict the characteristics of

MPOS solutions. That means that the tip of the MPOS PYRAMID™ doesn’t imply the “best” it simply

implies that the fewest players are concentrated there

given the various elements of the service offering that

those merchant facing players provide to their

merchants.

MPOS PYRAMIDTM Methodology

We have divided the MPOS market into “layers”

representing the broad set of capabilities included in

the MPOS service offerings. This, we hope, more

easily helps to categorize the MPOS ecosystem by

focusing on the capabilities that the various players

who serve the merchants in this market offer them.

The “powered by” players are organized on the

outside of the MPOS PYRAMID™ and aligned with the appropriate capabilities that they “power” inside

of the pyramid.

Here’s how we have used the MPOS PYRAMID™ to organize the MPOS sector.

Core. Players in this quadrant offer the basic hardware/ card reader solutions to merchants that enable

mag stripe card acceptance and merchant processing services. Players in this space also have provided

some level of security encryption, although the level of security varies by powered-by provider. This is

where many players enter the market to establish an MPOS presence and merchant base.

Core + Back Office. Players in this quadrant have offerings that provide value-added solutions that

enable merchants and other SMBs to perform important back office functions. These functions include

tracking/managing inventory, creating invoices, integrating with accounting systems and/or other

applications that assist merchants and SMBs in managing their back office.

Core + Front Office. Players in this quadrant have offerings that provide value-added solutions that

enable merchants and other SMBs to perform important customer-facing functions. These functions

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

include loyalty, marketing, CRM and advertising solutions that enable merchants and SMBs to more fully

manage support marketing, sales and customer retention activities.

Core + Front and Back Office. Players in this quadrant have offerings that provide value-added solutions

that enable merchants and other SMBs to support both front and back office functions as described

above.

Merchant/Consumer Network. Players in this quadrant have offerings that leverage mobile technology

to serve both the

merchant/SMB and

consumer. These players

provide core + front and

back office capabilities

along with consumer-

facing applications such

as wallets. These players

use mobile devices and

other assets on both the

consumer and merchant

side to create a network

enabled by mobile

devices (phones and

tablets) and relevant

applications.

Open Platform/API.

Merchant-facing players

in this layer are serving

merchants directly but have also made a decision to open their hardware/software services to

developers via APIs. This is an effort to expand the number of merchants/SMB’s that they can reach as

well as to make it easier for their own solutions to be enriched by other developers who can add

functionality to the core offer.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

MPOS Player Profiles | New for February 2013

Circle it Up

Category Core

When Launched September 2012

#Customers/volume n/a

Focus Small and Medium Businesses

Location India

Pricing n/a

Circle It Up is a strategic brand of Brainy Lions Online Services (P) Ltd, designed to enable quick

payments and fund merchants quickly though Android, iOS and Blackberry systems. Circle it Up offers

flexible pricing such as pay as you go options and without long-term financial commitments or fixed

fees.

Cube

Category Core + Back

When Launched 2012

#Customers/volume n/a

Customer Focus Small Businesses

Geographic Coverage United States

Pricing

2.5% per swipe or 3.5% per key-in card information or integration

into existing merchant account

Cube launched to focus on small businesses does not require a long term contract. Cube has daily limits

of $5,000 and weekly limit of $30,000 for swiped credit card transactions per swipe and a daily limit of

$500 and weekly limit of $3,000 for key-in credit card transactions. The company also offers an

Enterprise plan where customers may integrate existing accounts for convent MPOS credit card

processing.

The system offers employee time tracking, integration with cash drawers and receipt printing. In

addition, Cube has created a POS system to offer item inventory control, sales reporting, discounts,

multiple tax rules, labor reports, cash management, and modifiers.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

Miura Shuttle

Category Core + Open

When Launched February 2013

#Customers/volume n/a

Customer Focus Small to medium sized businesses

Geographic Coverage United Kingdom

Pricing

n/a

Created by Thales, a company focused on information systems and communications security, Miura

Systems enable merchants to accept Chip & PIN payments from a mobile device at the point of sale

(MPOS). The Miura Shuttle is standard alone MPOS device that connect to iOS and Android smartphone

and tables via a Bluetooth connection. To complete payment, the shopper needs to insert the PIN code

into the device, and the result is then shown on all the devices (Smartphone and Shuttle). Shuttle offers

a secure mobile payment solution for retails and shoppers.

The combined solution from Miura and Thales not enables merchants to take advantage of the security

qualities of these companies to reduce fraud and simplify compliance. The shuttle is EMV Level I & Level

II Certified.

MTS POS

Category Core

When Launched December 2012

#Customers/volume n/a

Customer Focus Mobile

Geographic Coverage India

Pricing

Between Rs.200 – Rs.300 per month

MTS is a mobile telecom service in India that offers a complete MPOS bundle, smartphone, mPOS

hardware attachment and a one year data plan, enabling customers to use the solution right out of the

box. MTS claims that service is fully secure and the Debit / Credit card details are fully encrypted at the

time of transactions and that the MTS mPOS is based on PCI – DSS standards. The company tested their

product with online Indian internet retailers like Flipkart.com and Yebhi.com.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

Payfirma

Category Core + Back Office + Open

When Launched June 2011

#Customers/volume n/a

Focus All sized businesses

Location Canada

Pricing $25 set up fee + $10 monthly fee + 1.99%-2.92% + $ .25 / swipe

A minimum monthly fee of $40 is applied to companies that don’t process

more than $2,800 per month.

Payfirma offers MPOS and online transaction payment processing. The MPOS acceptor can turn an iPad

into a complete POS system, enabling checkout and item management. Payments can be tracked for

cash; checks; debit and credit cards. In addition to mobile and table point-of-sale, Payfirma includes a

customer vault, recurring billing, and eCommerce. This ties all payment types in a single account

Nedbank's PocketPOS

Category Core

When Launched February 2013

#Customers/volume n/a

Customer Focus Small to medium sized businesses

Geographic Coverage South Africa

Pricing

n/a

Launched in February 2013 by South African NedBank, this is the first live EMV-certified mobile point-of-

sale (POS) solution in South Africa that enables businesses to process debit and credit card transactions

by using a smartphone connected to a secure card reader. EMV Chip & PIN technology is mandated in

South Africa. The solution was created in the form of two different secure card readers. The first is a

small device with a PIN pad that captures an email address into the smartphone application and sends a

digital receipt to the email address to secure the transaction. The other device provides the ability to

print out a physical receipt, much like in the case of a traditional POS. Both card reader devices have a

secure PIN pad for PIN entry and use Bluetooth technology to connect to the smartphone.

The device was created to be used by businesses as a backup device or as a parallel device to reduce

queuing time for customers. PocketPOS is targeted to business segments where cash is still the primary

method of payment or where they operate 'on the road'. This would typically include delivery, courier

and home delivery services, plumbers and electricians, events, concerts and market days as well as taxis.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

Revel Systems

Category Front+ Back office

When Launched 2010

#Customers/volume n/a

Customer Focus Restaurant and Retail establishments

Geographic Coverage United States

Pricing

n/a

Cash register system that uses an iPad as the POS that stores the information in the cloud. Offers real-

time reporting for management and access to the system anywhere. The centralized system enables

real-time sales volume and inventory management. Revel is fully PCI Compliant, from the hardware, to

the software to the network. Revel was designed to target a variety of markets; the SaaS-based

solutions deliver a scalable system for Retail POS, Grocery POS, Restaurant POS, Mobile POS and

customer-facing kiosk POS systems.

YES Bank

Category Core

When Launched December 2012

#Customers/volume n/a

Customer Focus Merchants targeted to collect payments in homes

Geographic Coverage India

Pricing

Rs 2,000 and Rs 250-500 per month

Another MPOS has emerged in India, targeted to merchants that require home delivery services for

payment collection — specifically high-end corporates, insurance agents, restaurant chains and

eCommerce platforms among others offering cash delivery. To collect payment a merchant must have a

GPRS enabled mobile phone. YES Bank has partnered with insurance agents and running tests with

retailers in the internet space as well as food retailers.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

MPOS Merchant Facing Players | February 2013 Updates

iZettle

Category Core + Open

When Launched August 2011

#Customers/volume 50,000 Merchants

Customer Focus Small merchants in Europe that don’t accept cards

Geographic Coverage Sweden, Denmark, Norway, Finland, the UK, Germany, France and Spain

Pricing

2.75% for MC and Diner’s Club or 2.95% for AMEX

Update: iZettle launched wireless Chip & PIN device, can now take Visa payments.

KWI Cloud 9

Category Core + Back + Front

When Launched January 2012

#Customers/volume Implemented in over 500 retail stores, nearly $100 million dollars in sales, over 1.4 million transactions, and 6,000 transactions/day during December 2012

Customer Focus Specialty Stores

Geographic Coverage United States

Pricing

n/a

Update: Cloud 9 announced that sales have been growing since launch in 2011. Over 25 retail brands

implemented in over 500 retail stores, nearly $100 million dollars in sales, over 1.4 million transactions,

and 6,000 transactions/day during December.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

mPowa

Category Core + Open

When Launched June 2012

#Customers/volume n/a

Customer Focus Banks, Telcos, Large corporations for the open solution and SMBs

Geographic Coverage The UK, South Africa, Portugal

Pricing

Linked to existing merchant account.25% or minimum charge $0.40 or

£0.25 or €0.30. Or 2.95%

Update: mPowa announced a white-label deal with Portugal Telecom for the carrier to resell mPowa

ShopKeep

Category Core + Front + Back Office

When Launched 2010

#Customers/volume Targeted 5,000 merchants by end of 2012

Focus Small retailers and quick serve restaurants

Location US and Canada

Pricing

$49 for one register and $98 for two registers per month

Update: ShopKeep and LivingSocial launched an integrated solution that lets merchants process mobile

payments and build loyalty from the POS system. Merchants will be able to take LevelUp’s 0% payment

processing fees and participate in loyalty programs to retain customers.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

SumUp

Category Core + Network

When Launched August 2012

#Customers/volume 10,000s of Merchants

Customer Focus Small to midsize companies that don’t already have terminals (taxi

divers, craftsmen, market traders)

Geographic Coverage UK, Ireland, Germany, Austria, Italy, Spain, The Netherlands, France,

Belgium, Portugal

Pricing

2.75% per transaction

Update: SumUp now can process American Express payments. The company also announced that

SumUp Pay is being developed for launch later in 2013. SumUp Pay will let end-users pre-approve a

participating merchant though an app and then allow the customers to pay with a confirmation, without

needing to take out the phone. Also, SumUp announced that there are several tens of thousands of

merchants using the terminals.

Square

Category Core + Back+ Network

When Launched 2010

#Customers/volume 2 million people using Square 75,000 merchants (July 2012). 6 billion per year

Focus Starbucks, SMBs

Location US and Canada

Pricing

2.75% per swipe for Visa, MasterCard, Discover and American Express or

$275 per month

Update: Square launched ‘Business in a Box’ package, two Square credit-card readers, a stand and a

receipt printer and cash drawer. This package with cost $600 and aims to make accepting payments a

complete package to help small businesses start up including enabling them to take cash.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

Payleven

Category Core + Open

When Launched June 2012

#Customers/volume 1,000 Merchants in Berlin for trial

Focus All merchants

Location Germany, The UK, Italy, Brazil, The

Netherlands, Poland and Spain

Pricing 2.75%

Update: Payleven is now fully enabled to accept Visa credit and debit cards in the European Countries in

which it operates. With the Chip & PIN technology, Payleven can accept all Visa and V-pay branded

cards.

PayPal Here

Category Core + Network

When Launched March 2012

#Customers/volume 200,000 Merchants

Customer Focus All areas of business, merchants

Geographic Coverage US, Canada, Japan, Hong Kong, Australia and UK

Pricing

2.7% transaction fee, with no monthly fee. The fee for non-swipes goes up

to 3.5%, with a $ 0.15 fee

Update: PayPal here is now in the UK, the second biggest PayPal market outside of the US, with some 18

million active users.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

MPOS Suppliers | New for February 2013

Payworks

Payworks was founded in 2012 and is funded by the Central Innovation Program for SMEs of Germany’s

Federal Minstry of Economics and Technology. Payworks provides a turnkey white-label product to

facilitate the rollout of complete payment acceptance. The company works to facilitate e-commerce and

POS transactions. The company provides SDKs (including hardware integration) and white label mPOS

solutions for a wide range of payment applications

Payworks has partnered with leading payment processing companies and acquiring banks across the

globe. Over 80 providers have connected to the Payworks platform. The MPOS can accept payments

from Visa, MasterCard, American Express, Diners Club, JCB and China UnionPay. Payworks worked with

Austrian Payment Service provider, PayUnity, to allow small and medium retailers to easily accept card

payments at Oktoberfest in 2012.

MPOS Suppliers | Updated for February 2013

ROAM

In February, ROAM announced the launch of a Professional Services Group that will focus on

streamlining the different factors of mobile technology into existing payments infrastructure that

customers use. Also in February, Visa announced a partnership with ROAM, which should help to bring

Visa’s new Visa Ready platform to more merchants and acquirers. ROAM becomes Visa’s first

mPayments partner for the Ready platform, and those already using ROAM swipe-and-dongle devices

have access to Visa’s API too. Click here to listen to a podcast with MPD CEO Karen Webster, ROAM CEO

Ken Paull and Visa's Global Head of Business Development Matt Dill as they discuss this new

partnership.

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

Appendix

The MPOS Report Context

The MPOS Tracker™ organizes the ecosystem into two broad categories: those merchant-facing

organizations who supply devices to merchants directly and those who “power” those players and

supply them with the MPOS hardware, software, tools and services that helps merchant-facing

organizations meet their customer needs. This, we believe, helps to further establish and define the

playing field in what has become a very active space.

What the MPOS Tracker™ is:

The MPOS Tracker™ is designed to offer an organizing framework for evaluting the many players that

have entered the mobile point of sale (MPOS) sector. For the purposes of the Tracker, we will look at all

mobile devices – mobile phones and tablets - and will profile players who enable commerce via either.

Consider the monthly MPOS Tracker™ as our best attempt to give the payments space a “playbook” on

the MPOS ecosystem and how it is evolving – a sort of “who’s on first” perspective of who’s in it, what

their offerings are, and how the market may have evolved month to month. On a quarterly basis, we

will do a “deep dive” into the vendors that play in a specific category.

What the MPOS Tracker™ isn’t:

At least now, this report isn’t a rating or ranking of the players in this space – this feature will be

introduced in Q1 of 2013. It is also probably important to note that we take the information that is

provided to us by the vendors as accurate – we have not done our own due diligence to inform the

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

placement of the players on the MPOS Pyramid™. We will conduct diligence to support the

rating/ranking feature once introduced.

As we stated in our first report (October 2012), the MPOS ecosystem is moving quickly and this report is

by no means complete – which is why we have chosen to do monthly updates. Further, information

about the players is available in varying degrees of completeness. Details about volumes and shipments

– the information that everyone finds most valuable – is not publicly available. In fact, our big wish is to

publish an aggregate number of MPOS shipments so that we can track how this market moves in more

quantifiable terms. We thank those who have provided us with that information, so far, but would more

so that our report can be complete. We will not publish this information for any individual player but

will only publish an aggregate number on a quarterly basis. If you would like for your numbers to be

added to the total aggregate MPOS Tracker™, please contact us at mobilepos@pymnts.com.

If you would like to be included in this report and/or would like your information to be updated, please

contact us at mobilepos@pymnts.com and we will send you the data sheet required for submission.

Further, if you would if you would like to be included in our ratings and ranking, please indicate this as

well so that we can send along our more detailed questionnaire for you to complete.

Why is MPOS Relevant?

The diffusion of smartphones worldwide has revolutionized the payments industry in a variety of ways.

Mobile phones are being considered (and trialed) in both the retail payments environment and the

acceptance/point of sale environments. “Going mobile” today now means that both customers and

merchants are able to gain tremendous efficiencies at a point of sale that can accommodate the form

factors that consumers use today - the plastic card – and move that point of interaction closer to the

customer. Merchants large and small are able to gain business efficiencies as well as new customers and

sales.

Along the way, card readers have been transformed into tiny devices that plug into the headset jacks of

mobile phones and tablets, turning these powerful IP-enabled computing devices into mobile point of

sale terminals- thus the MPOS acronym. But the power goes well beyond card acceptance anywhere, by

anyone. These mobile point of sale devices leverage existing payments functionality and infrastructure

which means that the chicken and egg issues typically associated with new payments entrants don’t

exist. MPOS card readers enable the acceptance of the plastic cards that consumers carry in their wallets

today and like to use.

MPOS may have started life as a way to enable casual sellers and small merchants to accept cards, but it

is quickly moving up the merchant supply chain. MPOS actually started life way back in 2008 – before

Square - in the mobile “field services” space enabling tradespeople and other field service personnel to

deliver their services and generate both an invoice and a payment on site. Square applied this concept

to the micro merchant who was unable to accept anything other than cash or check. Now, Tier One

retailers are turning tablets into cash registers and moving payment and check out to wherever the

Organizing the Mobile Point of Sale Ecosystem | February 2013 Ecosystem Analysis

consumer happens to be in the store. Clearly, MPOS is reinventing the entire commerce experience for

all types of merchants and consumers.

Quite naturally, given the “perfect storm” of mobile devices, consumers and plastic cards and existing

payments rails, the market has seen an explosion of POS players enter the market. MPOS players can be

divided into two camps: the dozens of players who supply devices to merchants and the universe of

players who “power” those players and provide them with the MPOS hardware, software and enabling

platform functionality needed to meet the needs of their customers. The capabilities of those who

“power” the suppliers range greatly, and as a result, the MPOS offerings in market today exhibit a wide

range of functions from basic payment card acceptance and processing (eg. Groupon Payments) to

enabling a merchant/consumer network (e.g. Square).