Merchants who accepts card based payments or cardless payments pass on the processing fee that they owe to the companies to their users. The users end up paying more than what the service costs. The business model of higher processing fees for cardless transactions is not an ideal one for both the users and the merchants (especially small businesses). Some of the popular and not so popular mobile payment apps which are an answer to the higher processing fees are listed below:
Google Wallet 2.0
Similar to other mobile payment apps listed in this post, Google Wallet allows user to integrate their smartphone with their bank accounts and make a payment. This also means that the merchants have to deal with a relatively low transaction processing fees.
There have been talks that Google Wallet will be integrated with a user’s Gmail account and the users will be able to send money via email. There is a possibility that the mobile payments space will see a significant change if money transfer via email is a hit among the masses.
The payment network supporting Dwolla doesn’t deal in credit cards. Dwolla allows users to transfer money through their bank accounts at a processing fee of 25 cents (USD) per transaction for transactions worth over $10. Any transaction less than $10 is processed for free. Flat out processing fee charged by Dwolla certainly helps users to avoid understanding the confusing system of payment as fee associated with credit card payments.
Merchant Customer Exchange (MCX)
MCX is a mobile payment app exclusively developed for retail shopping. A user’s bank account is linked to this app and the user uses his smartphone to pay through the phone. MCX merchants mostly retailers will accept the non-cash payment and do not have to worry about the transaction processing fees as there is none here. One of the other main features of this app is that it allows its user’s to redeem coupons and deal at the checkout. The only drawback of using MCX is its need to shop and pay in USA.
Bitcoin Wallet (BitPay)
Bitcoin is being accepted by local merchants who accept mobile payments as part of the transaction process. A user can buy Bitcoins online through real cash and use it to buy goods or services. The real benefit of accepting Bitcoins by the local merchants is that they avoid high credit card processing fees making usage of Bitcoin Wallets attractive. The only fee that the merchants pay for accepting transactions through Bitcoin Wallet BitPay is 0.99 percent of the total sale. In comparison to other popular mobile payment apps which charge 2.75% per transaction, transactions through BitPay certainly seems to be attractive.
LevelUP a mobile payment app charges zero processing fee for the merchants making it one of the most economically feasible mobile payment app for merchants. LevelUP decided to do away with the processing fee in July 2012, the move was made to ensure that the merchants see the value behind using LevelUP over other mobile payment apps. According the Fast Company, processing fees for the merchants in the US costs about $50 Billion every year.
Square is an interesting addition to this list as in terms of processing fee, it charges the highest. Merchants can get their secure card reader for free from Square and also there isn't any registration fee for the merchants. Square offers the merchants to chose from $275/month flat fee or pay 2.75% per swipe. Square claims to have over 1 Million active merchants which includes small businesses transacting through Square.
Stripe found and run by Ex-PayPal co-founders is a popular mobile payment app in the USA and Canada. Stripe has no setup fees, no monthly fees, no validation fees, no refund fees, and no card storage fees. There’s also no charge for failed payments. Stripe users pay 2.9% and 30 cents as processing fees. There are also charges if you're payment doesn't go through. For a full list of pricing on using Stripe, click here.