This article originally appeared in the August 2010 issue of Growing for Market, the magazine for market farmers. Please join us; GFM is available by mail or online. Click here for subscription options.


iPhone with Innerfence Ap
At the farmers market in Sedona, Arizona, market manager Katrin Themlitz has a new tool for increasing sales: her iPhone. Using mobile payment technology, she is able to process debit and credit card payments right on her cell phone, without a phone line or credit card terminal. “It’s a convenience to vendors and a service to customers,” she said. “About 15-25% of our sales a month are credit and debit cards” processed through her iPhone.
It’s a well-documented fact that taking credit and debit cards increases sales. One farmer at a Washington, D.C, farmers market reported that accepting credit cards increased his sales 30 percent.  Many farmers market vendors do accept credit cards, usually in conjunction with Electronic Benefit Transfer (EBT) cards for food stamps and other government assistance. Those systems, however, require either a phone line and credit card terminal, or expensive wireless card readers.

Now, new mobile technology is expanding the possibilities for vendors everywhere to process credit and debit card payments on an iPhone or other smart phone. It’s not yet trouble-free, (one vendor described it as “awkward and time-consuming”) but new options are arriving frequently to make mobile payments more enticing. With so many web-enabled phones on the market, it’s important to check for compatibility. Fees also vary among the products. In general, you can expect to pay a monthly service fee, a fee per transaction and a “discount rate”, which is the percentage of each sale withheld by the merchant service provider. Some systems require a separate “payment gateway” with its own fees. Read the fine print!
Here are the leading contenders so far in the mobile payment offerings:

Innerfence is compatible with the iPhone, iPad, Mac, and Android. There is no device to swipe cards; all transactions are keyed in manually. The ap is shown in photo at right. Innerfence is partnered with Merchant Focus to provide merchant services and as their payment gateway. However, if you have an existing merchant account you can continue to use it if it is compatible. Innerfence charges an upfront $49.99 for the app (on sale now for 99¢), a $25 per month service fee, 24¢ per transaction and a discount rate of 2.09% - 3.79% per transaction. There is no device to swipe cards, and therefore all transactions must be keyed in manually. Typically cards that are not swiped are downgraded to “mid-qualifying” status and a higher discount rate applies. However Merchant Focus doesn’t downgrade these transactions and all qualified cards that are keyed in will have the lowest discount rate of 2.09%. 

This is the system used by Katrin Themlitz at the Sedona Community Farmers Market. She has devised a system whereby customers can shop the entire market then bring invoices from multiple vendors to her. She processes the total credit or debit card payment on the iPhone, and emails the customer a receipt. She tracks how much each vendor is due and writes checks once a month. Vendors pay 3.75% of their sales to cover fees and expenses.

PAYware Mobile from VeriFone is a system that allows the vendor to swipe a card through a sleeve that attaches to an iPhone. This service requires that you have your own merchant account and you will pay the fees associated with that account separately from the cost of the VeriFone PAYware connect gateway. Only available for 3G and 3GS iPhones, the app is free. The sleeve is only available from select VeriFone distributors.

Intuit’s GoPayment system can be used with almost any Internet-enabled cell phone. A Bluetooth card reader is available for $144.95 and a Bluetooth card reader with a printer costs $218.95. The card readers are not compatible with the iPhone or iPad, but there is an iPhone app. Transactions can be keyed in without the card reader, but they will cost a full percentage point more than the 1.70% charged for swiped transactions. There is a $12.95 monthly service fee in addition to a 30¢ per transaction fee. Intuit gives you $3 off the monthly fee if you use it in coordination with their Quickbooks products, which may have a bookkeeping advantage.

PayPal’s Send Money is driven more by consumer demands to transfer money without cash between individuals. Users log in with their PayPal credentials or with their cell phone number and a numeric PIN, and they can send or request money and manage their account on the phone. To send money, users choose a recipient from their cell phone contacts or “bump” two phones together. For that, the application (app) uses technology from Bump Technologies, which developed it to swap contact information between two phones. The money is transferred immediately. It requires that each member of the transaction (the vendor and the customer, in this case) have a PayPal account. There is a 2.9% fee plus a 30¢ per transaction fee. And if you accept money from individuals who have their PayPal account set up on a credit card, there is an additional 2.9% fee plus 30¢ to get your payment from PayPal.

Gwin Grimes of the Artisan Baking Company in Fort Worth, Texas, uses the Quickbooks app for the iPhone when selling at the Cowtown Farmers Market in Fort Worth. Here’s what she says about it:
“So far, what I can tell you is that it takes a while (too long, in my opinion) to process. I have to open the app, input my password (which they make you have a very long & complicated password for security purposes), then wait, wait, wait to log in.
I then have to type in the card number, cardholder name, expiration date, billing zip code. Then it processes and gives a signature screen (which customers have no idea how to sign with their finger in such a tiny space -- I tell them to just mark it or put an "x" -- then is gives the option to send a receipt via e-mail or text message. To process another card, I have to close out and log back in again. It is awkward and time-consuming. However, I get an approval/decline immediately, which is far superior than calling in all the cards, which is how I used to do it. I figure if a customer wants the convenience of using a credit card at market, then they will have to put up with the time it takes to process. I get, at most, two cards on a busy Saturday morning out of a total of about 200 sales transactions.”

Square is still on the horizon. Started by Jack Dorsey, the Twitter co-founder, it will offer a free app and free card reader that plugs into the audio jack of your iPhone, Android or Blackberry. The major advantage of the Square is that it only requires the customer to have a credit card and the vendor doesn’t need to buy any other hardware. The Square system charges a 2.75% fee and 15¢ per transaction for swiped cards and 3.5% plus 15¢ for keyed-in transactions. 1¢ of each transaction fee can go to a charity of your choice. It can take 2-4 days to receive payment. The Square is still in development. Originally scheduled to be fully released in early 2010, Dorsey admits in a recent letter posted on Square’s website “we’ve let our excitement get the best of us and have released parts of Square before they were fully baked.” Currently, the Square team is working on strengthening their underwriting infrastructure and hardware manufacturing. There is a lot of excitement among early adopters about this new way to accept credit cards, but they are also waiting up to eight months to receive the free card reader.

All of these systems value security for their users and no information is stored on the phone that could fall into someone else’s hands. Each system offers e-mail or text receipts. And they are all portable and lightweight.
As the technology advances, it will be easier and easier to accept multiple payment types. It only makes sense to investigate how to offer this convenience to farmers market customers, especially if accepting plastic will increase sales.