Wesley Faulkner: Intuit Squares Off In Mobile Credit, With A Little Help From Apple | Epicenter

Look out, Square — you have a new competitor, and it should go on sale in Apple stores before month’s end.

Intuit and mophie have teamed on a credit card-swiping iPhone accessory called Complete Credit Card Solution that will allow any approved iPhone owner to walk out of an Apple store in as little as 15 minutes with the ability to accept credit card payments.

Unlike other solutions, this one comes with the attachment, the payment app, and a merchant account, also operated by Intuit. All you need to accept credit and debit cards is this product and a 3G or 3GS iPhone.

Intuit introduced a mobile payment product 18 months ago to help mobile professionals like plumbers accept payments on the go, but quickly realized that without that familiar credit card swipe, customers weren’t ready to use the app. In addition, feedback from Intuit customers and the buzz around new companies like the delayed Square, from Twitter co-founder Jack Dorsey, demonstrated to Intuit that there was untapped demand to help local businesses swipe credit cards with iPhones in both stationary and mobile settings.

Intuit announced a partnership on Thursday with Apple accessory manufacturer mophie, which makes the one-million-plus-selling JuicePack battery supplement for the iphone, to create hardware for the $180 Create Credit Card Solution. Its card-swiping hardware fits onto the bottom of the iPhone, while the Intuit GoPayment app (also available separately) sends the money to an Intuit merchant account, also included. By the end of the month, Apple will sell the complete package in its retail outlets and on Apple.com, according to Intuit.

The hardware attachment only works with the iPhone 3G and 3GS. Due to Apple’s policy not to alert accessory manufacturers about upcoming design changes (with one notable exception), Intuit and mophie have not yet been able to manufacture a version that works with the new iPhone 4 design, but they say they’re working on that. And for the iPhone 3G and GS, set-up is a snap, and does not require a long-term contract.

Customers at establishments using Intuit's GoPay app can now swipe credit cards rather than filling their information out manually.

“Something that’s important to Apple, because this is going to be sold in their stores, is they wanted it to be incredibly easy to communicate what it’s going to cost, and how quickly you’ll be up and running — and that you’re up and running before you leave the store,” said Ross Howe, mophie’s vice president of marketing and new business development.

“And also the fact that there’s no contract. Most merchant service providers require hefty contracts and incredible termination fees, and the fact that you can turn this on if you’re in a farmers’ market for the summer and then just call and cancel your account until next summer, for really reasonable rates — and there’s something to be said for that.”

About those rates: Complete Credit Card Solution from Intuit and mophie costs $12.95 per month regardless of how much or how little you use it. It also costs 1.7 to 3.7 percent of each transaction plus $.30 to $.40 per transaction. Those fees are competitive. (Assuming you can get your hands on the hardware, Square charges 2.75 percent plus 15 cents.)

But the big payoff here is that there are no long-term contracts, and $13/month isn’t a lot to pay for the ability to accept credit cards and a merchant account. Up to 50 sellers can funnel money into a single account, for the same price, and sellers can create preset buttons for certain items, just like at McDonalds.

Intuit is best known for its Quicken line of financial management software, but the company has also offered merchant accounts since 2001, so it has experience acting as the bank in a credit card-payment scenario.

In addition, said to Mary Lunneborg, Intuit’s GoPayment senior product manager, some customers who paid using the manual-card-number-entry test run trusted it more because they had heard of Intuit before. Both of these advantages are crucial, because people need to trust a product before they’re going to swipe their credit card into an iPhone and sign it with their fingers.

Mophie’s Howe said the system encrypts credit card information at the hardware level before it passes through the phone, through the app and its data connection, and stays encrypted all the way to Intuit’s cloud-based merchant account, providing end-to-end security even if a virus or hacker has compromised the phone itself.

“[The credit card and user information] is basically data that the hardware has encrypted, so the iPhone sees it as just an encrypted packet of data,” Howe told Wired.com. “It’s NSA-level DUKPT technology. The key is created at the time of manufacture and impossible to decrypt without that key, which is kept in two unique locations — on both sides. The credit card is not a secret, because it’s on the card, but it was important to Apple and for mophie and Intuit to have that security, so that if somebody did have a jailbroken phone, they’re still not going to be able to just use this as a card scanner.”

Go Payment app integrates tightly with Intuit Quickbooks, as one would expect, Complete Credit Card Solution users can access all of their sales data through the website and aren’t forced to use Intuit’s other software in order to use this package. And while users don’t need a merchant account, they will need another account for accepting cash and personal checks.

Customers sign with their fingers directly onto the iPhone's touchscreen.

Intuit’s Lunneborg said the Intuit/mophie offering beats Square because it includes a merchant account and requires no minimums, whereas Square pays out $1,000 per week into an account at an outside bank, increasing that limit “as it gets to know you.” And this system beats non-hardware apps such as PayPal’s because it can swipe credit card information securely rather than relying on people typing it in. And while Verifone has a hardware solution, Howe points out that it does not include a merchant account for actually accepting the payments.

Meanwhile, the advantage over a traditional credit card set-up is that it’s mobile and handheld, and allows retailers, service-people, and other salespeople to take normal credit cards without a standard terminal, and without relying on the customer to have certain hardware, the way Visa’s payment system will.

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