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Mobile Credit Card Processing: The Pros and Cons

Square and other mobile applications have changed the merchant services industry. See what the pros and cons of mobile credit card processing is.
December 16, 2016 4 minute read


Mobile credit card processing is a way for merchants to accept card payments wherever they are. This is a particularly useful tool for small businesses and companies that do not have a set location or are onsite the majority of the time, such as construction firms, hair salons, taxi services, and other mobile retailers.

Here’s how it works: A reader is attached to a smartphone or tablet that allows a credit card to be swiped. It essentially works the same way as a typical POS system in which someone’s credit card information is read and processed in order to complete a transaction minus the installation and contract. 

The Rise of Mobile Credit Card Processing

Mobile credit card processing has been on the rise over the past few years, especially since the number of smartphone users has continually increased as well. According to Pew Research Center, a non-profit business that reports on news and trends, 72 percent of American adults own a smartphone as of February 2016 compared to 56 percent in May 2013 and 35 percent in May 2011.

With more smartphone owners, more people are starting to consider mobile credit card processing.


Square, a credit card processing and business solutions company, made a splash and redefined the market for mobile payments several years ago by creating a user-friendly reader for iPhone users. Square’s inexpensive, easy-to-use solution, which basically turned a smart phone into a point of sale terminal, immediately stole market share from notoriously unreliable, expensive, and clunky mobile terminal providers.

Almost overnight, payments companies followed suit and developed app-based solutions for smart phones and offered better pricing than Square, which offers flat rates for credit card processing that appealed primarily to small, or micro merchants (like dog walkers and babysitters), but not established businesses with consistent and material monthly credit card volume. 

The Pros and the Cons: Easy to Use, But Not as Secure

One major benefit to mobile credit card processing is the convenience and accessibility that it offers both merchants and customers. No matter where you are, you can make a transaction if you have a mobile reader. That means a construction worker or hair stylist, for instance, can accept payment for a service onsite. Mobile payment apps and corresponding readers are also simple to set up; merchants simply download the mobile app and plug the card reader into a phone’s audio jack.

But this isn’t something that only one company has anymore: mobile payment apps and readers are ubiquitous among credit card processing companies like MerchantPro Express (MPX). 

Joe Doyle, MPX Executive Vice President of Sales Development, says, “What they’ve [Square] done is actually really innovative.” Continuing, he explains, “But this is technology we all have now, and because merchant services companies have underwriting hurdles merchants must overcome before obtaining a merchant account, they don’t experience nearly the amount of fraud that Square does.”

Doyle also points out that even though Square does not charge any monthly fees associated with its mobile payment processing solution, “Their rates do vary, and it’s not always so obvious to merchants. Square charges you a lot more if you fail to swipe the card, or the swiper doesn’t read the card for some reason and you have to key it in.” In fact, Square charges 2.75 percent on all credit card volume that is swiped and 3.5 percent as well as $0.15 for every manually entered transaction.

Some companies, including MPX, can charge much lower rates that can be tailored to suit the needs of larger merchants that process either greater volume or handle more transactions. Sure, the pricing might not be as simple as that of Square’s, but merchants would end up paying considerably less to process credit card payments. Therefore, merchants should look into whether or not those rates end up being less than the amount they would pay if they go to a merchant services company and purchase or lease a POS system. And though purchasing a mobile credit card reader and downloading the app from Square or companies like it (such as PayPal Here, BluePay, Intuit GoPayment, PayAnwhere and Amazon Local Register) does not require a contract, there are some merchant services companies that do not either.

Additionally, when it comes to credit cards, people become nervous since there have been numerous cases of security breaches and fraudulent activities over the past few years with people’s personal information being stolen. Mobile credit card processing is still fairly new and not everyone is up to utilizing technology, so many people may still be wary that their card information is not safe, especially because using a mobile credit card reader involves connecting to the internet.

There have also been some issues, particularly with Square, in regards to customer service and account holds and/or terminations.

For example, there was an instance in early 2014 in which science fiction writer Alex Hvartsman talked about his frustrating experience with Square, claiming they terminated his account without informing him first after stolen credit cards were used at his game store and he received two chargebacks as a result. In the end, Hvartsman did get his money back, but it took several months and the experience still does not sit right with him because of Square’s lack of communication and alleged inadequate customer support.

Consider All of Your Payment Options

Merchants should do their research and figure out whether or not teaming up with a merchant services company rather than purchasing a mobile card reader means leaving money on the table because it may end up being the other way around.


And while mobile credit card payments does have it's advantages, merchants are wise to speak with a credit card processing professional that they know and trust or who comes highly recommended to them, so they won't have to worry about customer service or security issues. As Doyle concluded, “Trustworthy credit card processing professionals—which can be difficult to find—know it’s in their best interest to tell a merchant honestly whether they are better-suited for Square or a ‘big boy’ merchant account.”

Want to learn more about the benefits of MPX's services? Click here.

Topics: Merchant Processing

For additional information please call MerchantPro Express at 888-333-1374 or email info@merchantproexpress.com.

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