iZettle and the modernisation of money

Jewellery maker taking payment on her tablet computer

Wednesday could see another important step towards the modernisation of money. iZettle, a device that allows small traders to take credit card payments, is arriving in the UK after a successful rollout in other markets. But a failure by big payment firms to agree common standards on how we use these mobile money systems could mean the whole idea fails to fly.

iZettle is a small card-reader that plugs into iPhones, iPads and a number of Android smartphones or tablets. It is designed for use by any small trader who can't afford the infrastructure needed to take credit card payments. You hand over your card to the stallholder - or plumber or window-cleaner - it is swiped through the device, and then you sign for your purchase. The merchant pays a commission of 2.75% a transaction, and the consumer gets to use their plastic rather than cash in new places.

I tried it out at a launch event and it worked pretty smoothly. A scented candle manufacturer told me she had been using a trial device for some months, and had found it was an excellent way of taking payments at craft fairs.

iZettle was launched in Sweden a year ago, and according to the co-founder Jacob de Geer, it is now used by more than 75,000 small businesses and individuals in six countries. In Sweden, he told journalists at the launch, 700 blacksmiths are using the device. "It's bringing new merchants to the table. My ambition is to democratise card payments."

iZettle in action Payments with Mastercard and American Express are quicker than with Visa cards

The big question in the UK, though, is whether consumers will fancy the idea of having their cards swiped into this device. And here there's a hitch. There are big names backing iZettle including the mobile operator EE, and the payments firms Mastercard and American Express.

But the other major force in the card industry, Visa, is an investor in a much bigger player in the mobile payments area. Square, started by the Twitter founder Jack Dorsey, is making rapid progress in the United States market and is now valued at something over $3bn.

And what people couldn't help noticing at the iZettle launch event was that paying with Visa was a lot harder than with other cards. Whereas with Mastercard or American Express the consumer just presents their card and signs, Visa users had to hand over their phone numbers and tap in security details on their own phones.

It seems that Visa is not too keen on the "chip 'n' signature" security that iZettle uses, even though the Swedish company says it has a lower fraud rate than for chip and pin transactions. When I asked Visa about the issue, the company sent me this statement: "We're continuing to work with iZettle to develop a fully Visa Europe compliant mobile point of sale solution."

The trouble is that any kind of friction in a mobile payments system is annoying and will lead many to conclude they are better off sticking with cash.

There are now lots of different mobile payment technologies from all sorts of companies, but they all seem to have different ways of verifying who customers are. But with little evidence of any great enthusiasm for mobile money - unless it makes life easier - surely it is time for the payments industry to get its act together and agree some common standards.

Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this

    Comment number 209.

    7th November 2012 - 20:14
    This sort of concept - digital cash, mobile wallet - has actually been around for some time already... Mondex
    It all started in Swindon in 1993, I remember it well

  • rate this

    Comment number 208.

    Anything of help to small businesses is welcome but charges are far too high.2% of £1000 is not much but 2% of £5 is,at least to the small business.
    A system needs to be introduced with a much more liberal sliding scale of charges to really be effective.
    It is also obvious that Visa is just frightened of loosing money if they agree to this simpler method of paying.

  • rate this

    Comment number 207.

    "The merchant pays a commission" - so in other words small businesses which are already struggling to the point of going bust are now going to be expected to take credit cards and pay commission to a middle man to receive less than they earned.
    In turn the merchant passes this fee on to his or her customers and prices go up again making small businesses even less competitive!

  • rate this

    Comment number 206.

    It's just another step on the insidious path to remove cash from our society. Only then will we be totally enslaved.

  • rate this

    Comment number 205.

    Im confused Rory - do you swipe your card or insert it? It's not at all clear from your article. I'd be very wary of using any swipe system these days, small business or large.

    To be honest, finding a technology which was acceptable to all the parties they wanted on board would - or should - have been part of this company's due diligence when they started out. They messed up.

  • rate this

    Comment number 204.

    @AlErgic #188

    > when was the last time you needed a blacksmith?

    So because *you* don't need a blacksmith, no-one should? What strange ideas you have. Farrier's have a lot of cross-over skills with blacksmiths and I can assure you they are used by millions every day. They spent their time interacting with customers in remote fields, so would find this of use. Don't be so short sighted.

  • rate this

    Comment number 203.

    Its a step forward but needs to be made fraudproof (how!) and easily take all cards, credit & debit. I'm sure we'll all be using this or similar in a few yrs and just take it for granted. However a 2+% charge for a very small business in the present circumstances is a lot of money. At the present time cash is definitely king (or is that queen?)

  • rate this

    Comment number 202.

    Hopefully there is more to life than the next electronic honeytrap.

  • rate this

    Comment number 201.

    @199.David H
    In reply:

    A) Pads used in Scifi, such as Star Trek TNG 15+ years ago before Apple were awarded patents had curves, are Apple sure they came up with the ideas related to their ergonomic designs?

    B) Unlike the banks machines that have cost people collectively 100’s billions if not Trillions in worldwide losses for fraud!

    C) Everything breaks; it’s a matter of robustness

  • rate this

    Comment number 200.

    Its funny to see how people are so negative towards this. In the US these systems have exploded in the market place and are the driving force of the remaking of retailing and restauranting for small business. The base of allowing people to accept card payment without the red-tape is a great move for small business owners. People need to think out of the box!

  • rate this

    Comment number 199.

    Give it a few days and :
    a) Apple will sue because it's got curved edges
    b) Major security flaw discovered
    c) Business stops if it breaks

  • rate this

    Comment number 198.

    How does it compare to other merchant accounts/ card reader providers?

    For transactions with the chip-card reader, and Visa transactions, the transaction fee is 2.75%. Manual transactions cost £0.10 + 3.50%. You only pay for successful transactions.

  • rate this

    Comment number 197.

    This is definately one for government regulation, the entire maket. And.... it is a licence to print money.... :)

    We have been here before and disaster waits.
    Security is actually impossible, the medium must simply immitate cash not credit and that cash must be real.

    Issac Newton got involved in this debased coinage of the realm thing... long time ago, when he ran the Mint.

  • rate this

    Comment number 196.

    the worst idea ever was chip and pin as it removed ability and replaced it with information that required little skill to replicate in unlimited quantities hence why since chip and pin has come in we have ever greater amounts of card fraud. This will be the same increased risks for zero security as portable wifi devices will not even need physical access like with chip and pin just packet sniffing

  • rate this

    Comment number 195.

    As an aside, when talking tech many people use the term "safe" when they actually imply "secure". For me, "safe" implies measures to prevent injury and "secure" implies sufficient resistance to physical and logical tampering and design robustness.

  • rate this

    Comment number 194.

    The most important words in this article are "common standards". Industry collaboration, harmonising technologies, and enabling interoperability via open industry standards, are all essential if ubiquity, concept familiarity, reliability, and robust security are all to be achieved. Some players will always try to circumvent standards to get their proprietary tech to be the de facto standard.

  • rate this

    Comment number 193.

    IZettle is trying to do here in the UK and Europe what Square and others have done in the US. It's a great concept for retailers and very cool for consumers. But that said, In the US things are a lot different. Chip and Pin is only just being phased in. Us patrons still use signature for card payment so signing on an Ipad is novel. Tillify.com Ipad and Android Pos.

  • rate this

    Comment number 192.

    Think I'll stick with cash. Simple, needs no power and everyone knows they have been paid. All this gimmick does is make the banks more powerful.

  • rate this

    Comment number 191.

    Give me cash any day. I decide how much to carry, how much of it to spend, limit my exposure to what I'm carrying. It can't be traced, stored on a database, used to cross-reference my movements. It also encourages local commerce rather than this endless quest to save 50p by buying online.

  • rate this

    Comment number 190.

    This sort of concept - digital cash, mobile wallet - has actually been around for some time already. At the turn of the century I was involved in a project that prototyped a fully functional wireless payments and and from a Mondex smart card inserted into a wireless reader and using a Nokia 9000i Communicator as the keypad and screen terminal. It really did work.


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