A Personal Review of ROAMpay – The Mobile POS
January 4, 2012
According to ROAM Data, ROAMpay works in tandem with a compatible merchant account. That’s great, but we wondered throughout most of 2011 if the swiping unit and POS interface were any good. We wonder no more because Santa got us ROAMpay for Christmas. Thanks Santa!
When we tried out Square a few weeks back, we couldn’t believe how easy it was to set up and use. We figured nothing else would come close, but we were wrong. ROAMpay is awesome! We dare not claim one to be better than the other because both platforms are different.
Square has no activation fees or monthly fees but is limited in the sense that Square must also be your merchant processor.
- PLUS: Money is deposited the next day!
- PLUS: No monthly fees or setup fees.
- MINUS: The processing rates are non-negotiable.
- MINUS: You must use the Square POS technology to manage all your payments.
ROAMpay has a small activation fee and monthly fee to use but you can choose from a variety of merchant processors.
- PLUS: You have a variety of processors to choose from and therefore the ability to negotiate your rates.
- PLUS: You can supplement the ROAMpay mobile unit with your normal credit card terminal or desktop POS. They can all work together with the same merchant processor.
- MINUS: Most merchant processors charge regular monthly fees in addition to the ROAMpay fee.
- MINUS: You are not guaranteed to get overnight deposit. This is up to the processor to approve.
The MINUSes for ROAMpay are not necessarily negative marks. If you are a small business owner that already has a traditional merchant account, you can easily add mobile processing to your existing mix of payment methods. Nothing is different aside from the costs we mentioned.
Once you’ve got the swiping unit, the setup on your phone is unbelievably simple. You can even track cash payments through the POS interface and issue instant e-mail receipts to your customers. For instance, if you’re at a trade show, street fair, or similar event and a customer pays you with cash, those transactions can also be recorded and processed professionally through your phone. All historical transactions both cash and plastic can be accessed, reviewed, refunded, or voided if need be.
We don’t have a relationship with ROAM Data so Santa took the big risk that we’d dislike the product and put it on the Merchant Processing Resource’s naughty list. But that didn’t happen because this product is NICE!
Sean describes the experience of receiving and setting up ROAMpay in a 45 second video he created below:
To learn more about ROAMpay, visit ROAM Data’s official site.
Review Summary:
ROAMpay
Mobile Card Reader and POS
Reviewed by: Sean Murray
ROAMpay Swiper
Rating: 5 out of 5 stars
Date of Review: January 4, 2012
The point of sale isn’t what it used to be
December 16, 2011
“I’m sorry sir but our credit card machine just went down. Can you wait 11 minutes while I activate a card reader on my iPhone so I can take your payment?”
11 minutes. That’s how long it took Sean, the founder of the Merchant Processing Resource to set up a merchant account with Square. The point of sale is changing quickly. Dial-up terminals are becoming more and more like their carbon copy imprint predecessors and there’s no way to stop the changing tide. According to Square, 1 out of every 8 merchants in the U.S. uses Square to process credit cards.
The revolution in payments seems to have gone over the heads of Merchant Cash Advance (MCA) providers, a financial industry that purchases future card revenues of small businesses. If the big MCA players have plans in the works to overcome the obstacle of capturing revenues, they certainly haven’t made them public.
We first sounded the warning bell to the industry back in May, 2011, in an article that characterized the modern merchant as having four methods of accepting electronic payments: Desktop POS software, a terminal, PayPal, and mobile payment software. This payment makeup directly leads to rising costs of the MCA product. The ultimate result of our warning was…nothing. MCA providers have for the most part shrugged off the changes in the point of sale, rather than stay ahead of the curve. It’s a shame.
The Electronic Transactions Association (ETA) recently created a certification, a nationally recognized level of excellence for the payment industry employed to become true professionals. A Certified Payment Professional (CPP) will be best equipped to work with business owners and they are required to be knowledgeable on the subject of MCA, as indicated in the CPP handbook. The reverse is unfortunately not required of those employed in the MCA industry, where underwriters mostly hail from the worlds of lending or leasing. Bankcard is certainly not their strong point.
There is a big void of bankcard knowledge in the risk assessment of MCAs. Underwriters are accustomed to reviewing “batch data,” the amount settled out by a merchant, normally once at the end of the day. But press an underwriter for an explanation of where the batch came from, if the technology was PCI compliant, or what would happen to their interchange rates if they delayed settlement for a few days, and you’ll likely catch them scratching their head.
I once personally experienced this firsthand when a relatively new MCA firm sent a 3rd party site inspector to visit a clothing store prior to approval. The inspector’s report and photographs indicated that there was no physical credit card terminal on site but that a USB swiping unit was attached to a desktop computer at the register to accept card payments. The MCA provider declined the deal based on the report since the lack of a credit card machine flew in the face of the processing statements they received. I appealed the case to the CEO, who responded by e-mail with, “The merchant is showing $7,000 a month in credit card sales but when we visited the store, there’s apparently no credit card machine there. The statements we have must be fabricated.” Flabbergasted, I pointed out that the merchant uses desktop POS software and a swiping unit and that it had been verified in the inspector’s report. The last e-mail I received from the CEO was, “I don’t know what you mean by their computer accepting credit cards. Is this PayPal? We don’t do PayPal. We only fund merchants who process on site and they don’t seem to process on site. The deal remains declined.”
Just because I haven’t cited the name of the company, doesn’t mean this exchange wasn’t real. It was and It’s even more embarrassing because their goal was to be in the top three largest funders of MCA in the country. They’re still in business but they’ve suffered some major setbacks.
USB card readers have been in use for a long time and we recently had the pleasure of hearing from Richard Freedkin, the Co-founder of USBSwiper.com. We asked if the mobile pos software revolution was impacting the desktop industry. He shared this, “I don’t think that the USB card readers are being threatened per se… however; I believe that the Mobile Payments industry will make a dent. There will always be people using computers for their POS especially at more fixed locations and Internet access is much cheaper than mobile phone data plans that are required for processing to work.”
And while he’s probably right that the desktop POS experience isn’t going away, they’re not standing on the sidelines either. “We are also about 6 weeks from releasing our new beta version of our software for iPad, iPhone, iPod Touch and Android systems. We will also have a swiper for that platform as well. So we will offer the best of both worlds.”
Great firms innovate so we’re waiting…waiting…waiting for the MCA players to follow suit. If 1 out of 8 merchants are using Square, then the MCA industry is ignoring at least 1 out of every 8 merchants or failing to capture total card revenues from their merchants that use it.
Besides, technology companies like Roam Data are claiming that their mobile payments device has 3x the capabilities of Square. With Text2Pay, you can just SMS text someone funds or better yet, FaceCash allows consumers to make payments using their phone and their FACE!
Capturing payments directly from a merchant account is what made the MCA industry so popular but it could also be their downfall. If a merchant can activate a new account in 11 minutes, then surely there must be an increased focus on the overall banking and financial picture of a small business before purchasing future revenues. That might be where underwriters with lending backgrounds excel but if they don’t know bankcard, then they don’t know squat.
The point of sale isn’t what it used to be…
– The Merchant Cash Advance Resource
Merchant Cash Advance Diminished by Growth of Payment Technologies
May 15, 2011
Technology will be the end of us all
When bank lending dried up, Merchant Cash Advance (MCA) providers fulfilled the need to keep America’s small business owners going strong. By withholding a percentage of each credit/debit card sale automatically, there was no need to worry about a client’s ability to make payments. Without the risk of late payers or non-payers, MCA providers singlehandedly eradicated credit score from the underwriting guidelines. Or so they thought.
Only a small percentage of businesses in default actually close their doors. Circumventing the MCA provider’s merchant processor or incentivizing customers to pay with cash are issues that have plagued the industry for years. While this would constitute a clear breach in the sale of one’s future receivables, it’s not always a deliberate act of malice. However, there is a direct correlation between the frequency of breaches and *surprise* declining credit score.
But in the instances without malice, such as if damaged POS equipment prevents the flow of processing, there’s not much a MCA provider can do other than help fix it. These gaps in collection affect the bottom line and lead to upward pressure on costs or tighter restrictions on approval, two outcomes that nobody wants.
And as if there already wasn’t a strain, changes in payment technology are quickly eroding the MCA industry’s turf. The credit/debit card sales of a business aren’t exactly limited to one of these:
Now there are options, lots of them. In today’s world you can accept electronic payments with almost anything, a conundrum for MCA providers aiming to collect a percentage of all of it. And how about those routine PCI compliance upgrades? There are countless businesses with a basement full of old credit card machines that could be plugged back in, put back into service, and freely used to circumvent their financial obligations.
Take this clothing retailer for example. She qualified for an advance of only $5,000 but when it came time to convert the merchant account, the process wasn’t so easy:
Nearly all of the transactions conducted inside the store happen through the touch screen POS. The merchant statements reflect consistent historical sales of nearly $4,800 per month, instilling the belief that the future won’t be much different. But when the customer lines get too long, there’s a backup credit card terminal that they pull out from under the counter that still has an active account with a previous processor. Around the holidays, they dig out the old Tranz model terminals from the basement and use them too. For street fairs and trade shows, they attach their Square to their iPhone and process on the go. And when it comes to their website and Ebay, PayPal is their preferred method of payment.
This doesn’t mean the touch screen POS won’t continue to see $4,800 worth of action per month, but the situation doesn’t inspire a lot of confidence if the goal is to collect a percentage of their credit/debit card sales. What if they occasionally use Square inside the store? What if phone orders are punched into PayPal? These things may happen inadvertently or simply because their customers demand it.
To firmly secure a purchase of future sales, the MCA provider would need to do the following:
- Convert the touch screen POS system (which will very likely come with a fee from the POS reseller)
- Reprogram their backup terminal
- Reprogram all the old terminals collecting dust in the basement
- Force the return of the Square and replace it with their own iPhone processing attachment
- Delete PayPal from the HTML of the business’s website
- Instruct them to stop conducting business on Ebay
- Cancel the PayPal account altogether and replace with an authorize.net virtual interface or something equivalent
That’s a lot of effort for $5,000 but doing anything less is a gamble. That’s another reason why MCAs are more expensive than bank loans. Without set fixed payments, they are extremely vulnerable to economic ups and downs and now the explosion of payment alternatives.
Rather than stay ahead, the industry is becoming more fractured as evident by the rise of new funding sources such as Kabbage, that lends against future PayPal sales. It’s innovative but vulnerable. Kabbage depends on the success and status quo of PayPal for survival, a characteristic that is not likely to carry them far. Similarly, MCA providers are dependent on withholding a percentage of future sales, an uneasy task in a world where the point of sale itself is changing.
Innovation in the MCA space has gone as far as automated bank debits and a lockbox. One depends on the merchant’s use of a single bank account and the other is equally exposed to the issues we’ve discussed.
Which of course begs the question: If electronic payments are becoming more elusive to capture, how can the MCA industry survive? The obvious answer is to transform the product itself into a loan. Secure it against collateral and have the credit bureaus at your disposal. Breaches will become far less likely and electronic payments less elusive when there are actual consequences involved. It’s a dreaded word and one MCA representatives have spent years avoiding, but according to the state of California, it’s probably a loan already anyway.
As MCA providers struggle to keep up with payment alternatives, banks are wondering when we’ll all wake up from the “it’s not a loan” euphoria. If the goal is to provide capital and get more back, reprogramming a terminal isn’t going to cut it. How many free hours can America Online offer to bring people back to their dialup internet service? Technology changed and the age of AOL ended. So too may the age of Merchant Cash Advance…. at least in its current form.
– The Merchant Cash Advance Resource
