At Twizted Confections bakery in Normandie Center at Central and Woodlawn, customers using credit or debit cards will find themselves using Tina Reesman’s smartphone to complete their purchases.
Reesman is among what appears to be a growing number of Wichita merchants using the Square — a mobile card reader a little bigger than a large postage stamp that plugs into smartphones and tablet computers — or similar devices to process debit and credit card transactions.
“It’s very, very easy to set up,” she said.
The Square is among a growing number of devices — including Intuit’s GoPayment — that plug into smartphones and serve to replace bulkier card reader devices at the cash register that require a wire connection.
It portends smartphones’ inevitable utility as a means to not only process payments but to make them, experts said.
Reesman and her husband, Bruce, own the bakery and Not Just a Cop Shop, a retailer of safety and personal protection gear at 2817 E. Central.
She said it was while running Not Just a Cop Shop that they learned of the Square, and they began using it there last year.
Reesman said there are a multitude of benefits to using the device versus traditional card processing equipment. One is that there is no long-term agreement to own and use the device. The other is that she said the payments are credited to her account much more quickly than through traditional card processing companies.
Portability is the main reason Matthew Kesterson used the Square when he opened Monkey Bytes Computer Repair two years ago.
“It’s completely mobile,” he said. “Anywhere I have a cellphone signal, I can process a payment.”
David Kerstein, a banking consultant, said Square and other mobile credit card processing devices are making significant inroads in payment processing.
And the mobile wallet looks to be the next frontier for smartphones as a means of payment by the consumer. The so-called mobile wallet is a term used to describe a smartphone application to pay a specific merchant for a service or product. Starbucks, for instance, allows customers to pay for their purchases using Square Wallet — the same company that offers the Square card reader. There are also efforts under way by some companies to allow consumers to use their smartphones at a cash register as a substitute for a credit or debit card, Kerstein said. That development is likely a few years off because it requires special hardware inside a smartphone as well as a cash register to work, he said.
“So there’s been a lower adoption rate than the credit card readers, but … it’s clear that people are using mobile phones to make payments, transmit them in some way,” said Kerstein, president of Peak Performance Consulting Group in Austin, Texas.
He said for banks that make money from credit processing, the Square and other card readers threaten to take business away from them, or dilute the number of players in that space.
“It’s shifting business away from them,” Kerstein said. “They’re very aware of what the trends are.”
Longer term, it also changes how consumers use bank branches. He said it is one more service that lessens businesses’ and consumers’ need to use a bank facility.
“It’s another reason why people don’t have to use traditional bank services and go to the bank,” Kerstein said.
At least one Wichita bank is looking at its smartphone strategy.
Tom Morrison, senior manager for bank operations at Intrust, said a piece of Intrust’s business is providing services and technology to businesses so they can take credit and debit card payments.
To that end, he said the bank has in beta testing a device similar to the Square and other mobile card readers that Intrust merchants would be able to use on their smartphones.
“We are working on projects and products that can do that,” Morrison said.
As for mobile wallet, Morrison said that area is a little more gray.
He said Visa North America will be adding a new technology to its credit and debit cards called EMV that will require merchants to convert to new equipment to read EMV-equipped cards. EMV is a credit or debit card that is embedded with a computer chip that makes it more difficult for counterfeiters to duplicate, compared to the magnetic strip prevalent on credit and debit cards used in the U.S. today.
So adoption of mobile wallet and near-field communication technology, which would allow consumers to substitute their credit or debit cards with a smartphone, could slow, because merchants that accept card payments may not be willing to buy new equipment in addition to EMV readers that Visa will require them to buy.
“It really is an unknown landscape at this point,” Morrison said.