In 2009 Twitter co-founder, Jack Dorsey, launched Square, a revolutionary card reader that provides merchants with the ability to accept magnetic stripe credit card payments via their iPhone or Android devices’ audio input. This overnight success started a ripple effect in the mobile payments industry and soon after, several copycat models were introduced all over the world. Some of them include PayPal Here, mPowa, RoamPay, Intuit GoPayment etc.
Two years down the line in 2011 a Swedish company iZettle introduced a similar product but addressed the need of clients who predominately make payments with Chip and PIN credit/debit cards.
Absa Bank recently launched Payment Pebble a mobile payment solution that can be seen as an amalgamation of Square and iZettle. The solution grants the merchant with the opportunity to accept magnetic stripe as well as chip and PIN debit and credit card transactions using the audio input of the cellphone. Payment Pebble will be focused on the smartphone market more specifically Android, iOS and BlackBerry.
Payment Pebble is a product of startup Thumbzup and is headed up by ex-Google Country Manager, Stafford Masie. Earlier this year he was talking about the product known as Make Payments Fucking Easy or MPFE, but with the Absa partnership it seems like he had to settle with a name that is more subtle.
Masie says: “We are extremely excited about our partnership with Absa, not only because we will bring a world first innovation to the market with the largest retail bank in South Africa. But because we have gained a business partner that understands our vision for payments into the future and a bank that is truly forward-thinking in their ambition to change the lives of their customers for the better. This is the success story of a local company achieving extraordinary things globally, and Absa made this happen.”
It is alleged that Thumbzup raised over R80 million in VC funding and has a staff base of 20 employees. It seems like a substantial amount of funding for a South African startup, but with local manufacturing, the landed cost per device is approximately R350. At the moment it is not clear what the business model will consist of. Generally a percentage of the total cost of the transaction will be included in the final merchant service commission that is charged. It is however evident that with a high landed cost per device it will require critical mass as the breakeven cost controls the success or failure of the business.
Payment Pebble will be available in the first quarter of 2013 and current Absa small businesses can apply for a Pebble device and merchant account in due course. The mystery still remains whether this will be available to other acquiring banks or whether this will be a closed loop solution available only to Absa merchants. It will be interesting to see whether Capitec Bank and other major banks will also be following the current mobile payments trend.
About the author: Martin Ras is an aspiring tech entrepreneur heading up start up, Ching Payments and COO of software development company Byte Orbit. Follow him on Twitter on @Martin_Ras