Are banks waking up to market threats from mobile POS providers like Square, iZettle and Payleven?

These days’ small business owners are taking the non-traditional approach. They are signing up with mobile POS providers like Square, iZettle, Payleven, SumUp, Swiff, PayPal, etc to receive cashless payments. In the process banks seem to lose out on this trend of accepting cashless payments. Around the world, banks seem to have noticed this trend and are responding to the competition.

Banks are reaching out to the prospects to sign up for their mPOS services. We bring you 4 such cases where Banks are waking up to respond to market threats.

One such case is of BBVA Compass. In July, 2013 BBVA Compass announced that they would introduce a ‘Business Mobility Bundle’ service aimed at small businesses. This would help small businesses to manage their finances on the go. Through such service the bank is enabling customers with remote check deposit services, card reader for processing debit and credit card payments, mobile and online banking and no obligation to pay monthly fees, etc. As part of the promotion to gain customers the bank is giving a free Samsung Galaxy Tab 3 for qualifying customers.

In June, 2013 Lloyds Bank of UK, announced that it would be partnering with Monitise to offer card acceptance technology to small business owners. This meant that Lloyds became the first bank in UK to offer mobile POS services to merchants, startups, small business owners, etc. Speaking to the media about the reason behind such move Aidene Walsh, Managing Director, Transaction Banking, Lloyds Bank said 'There are more than 3.5 million sole traders in the UK who are missing out at the moment because they do not have access to existing mobile payments technology and we want to plug that gap with a service that is low cost and easy to use.'

Back in November, 2012 Bank of America announced that it would launch a new solution called Mobile Pay on Demand targeting small businesses. Mobile Pay on Demand was rolled out in December, 2012. As part of the service merchants would get a free mobile app and a secure card reader to accept cashless payments. By integrating their checking account with such service, merchants could get their payments processed the next day. Bank of America also claimed that such service would not entertain any monthly, annual or set up fees.

On January, 2013 Citibank tied up with Ezetap to offer mPOS services to approximately 320 Mn Citibank debit and credit card holders in India. Some of the merchants that Citibank claimed to have tie ups to use its mPOS service include BookMyShow, Shoppers Stop, Flipkart, Bajaj Allianz, etc.

LTP View: Banks may have been slow to respond to the market needs. Small business owners mostly need service providers who can offer those services at low costs. Traditionally banks have the resources that enable them to offer services at low costs to masses. It will be interesting to note how existing companies and startups get affected if more banks plan to offer such services to their customers.