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Since Square burst on the scene in 2010, the mobile point of sale market has exploded with dozens of solutions being offered by companies like PayPal, Intuit and VeriFone. They're all aimed at allowing merchants, usually small businesses, to accept debit and credit card payments on their mobile devices.
The problem with all this proliferation? Mobile phones really weren't designed to process payments, at least not reliably or securely.
The Payment Card Industry Security Standards Council, the industry watchdog for credit card security, has been struggling for some time to figure out how to deal with payment security on mobile devices. The group released a merchant "fact sheet" last week addressing mobile POS products but stressed that the fact sheet doesn't actually represent any new security standards.
Now MasterCard is stepping into the breach by providing its own set of guidelines for mobile point of sale provider and the merchants who use them. The new global initiative, called the MasterCard Mobile Point-of-Sale (MPOS) Program, is intended to help ensure simple and secure transactions when consumers use their debit, credit and prepaid cards to pay merchants that use these devices, the company said.
"The boom in mobile devices provides a huge opportunity for innovation across all industries — including payments," said James Anderson, group head of Mobile at MasterCard Worldwide, in announcing the program. "With nearly 6 billion mobile subscriptions around the world, there is tremendous potential to grow merchant acceptance — it’s imperative that manufacturers, vendors and merchants maintain the highest standards to enable a seamless and secure purchasing experience."
Along with providing information on mobile POS solutions and how they work, the MasterCard MPOS document also provides best practices that merchants and providers should follow when using mobile devices to accept credit and debit cards. Best practices cover everything from securing the applications to protecting personal data to providing receipts to customers.
The guidance for small businesses is particularly timely. MasterCard estimates that of the 1.2 million mobile POS solutions shipped in 2011, approximately 75 percent went to merchants who had no previous experience accepting credit or debit cards.
Some of the providers of mobile POS solutions themselves are joining with MasterCard in its efforts.
"While the market for mobile phone and tablet payment acceptance is in its infancy, it has already seen explosive growth," said Will Graylin, CEO of ROAM Data, in the announcement. ROAM markets its own mobile POS solution as well as providing a white label solution sold by many other providers.
"We’re very pleased that MasterCard is leading the efforts in providing necessary guidance to the industry for this important area that is rapidly expanding payment options for consumers and merchants," Graylin said.
"iZettle changes the way small businesses take payments and, over the last few months, iZettle has increased the Nordic payment card acceptance market by 10 percent," said Jacob de Geer, founder and CEO of iZettle. IZettle currently operates in several Nordic countries and is testing its solution in the U.K. "We’re happy to see a major player like MasterCard pave the way for safe, simple and smart payments for a growing industry and for the merchants that use new solutions like ours."
MasterCard said it will be expanding its program in the coming months.
Additionally, providers of mobile POS solutions will be able to assess their products against the MasterCard MPOS best practices and apply to be listed on MasterCard’s website. Registration for the program will open in July 2012, the company said.
For more stories like this, visit the POS research center.