AT&T and Intuit launched GoPayment, a mobile payment system, to compete with Square, increasing competition for NFC- and credit card-based payment options.
GoPayment works almost exactly like Square’s service. Both offer merchants a free card reader for use with phones and tablets, targeting small businesses by charging per transaction rather than insisting on a monthly fee.
GoPayment, however, undercuts Square’s 2.75 percent per exchange fee, asking 2.7 percent instead. AT&T subscribers pay an even lower 1.7 percent, while larger retailers who process more than $1,000 per month can opt to pay a $13 recurring fee.
Merchants may also flock to GoPayment since Intuit’s QuickBooks and TurboTax products, besides its other financial services, already claim a large customer base among small businesses. And AT&T boasts over 100 million customers, who may turn to GoPayment for its lower subscriber fee.
GoPayment may thus prove a tough rival for Square, which already faces ramped-up competition against NFC-based solutions like Google Wallet.
Wallet has yet to claim substantial market share as it only works on Samsung’s Nexus S and few merchants own the necessary terminals to process NFC payments.
But Wallet and other NFC-based systems may grow now that Isis, a coalition of credit card companies, carriers and manufacturers, joined the NFC Forum. Isis and the Forum are working to standardize the industry, attempting to broaden NFC adoption by pushing handset makers to install NFC chips on their phones.
Google is also reportedly working with Visa’s PayWave system to help merchants use existing terminals for NFC payments rather than mandating they buy new ones.
Wider NFC use threatens to undermine Square, although the company may prove difficult to topple as it continues to rake in profits and attract investors.
Virgin Group’s Richard Branson yesterday invested “multimillions” in Square, which boasts similar investments from Visa and VC firm Kleiner Perkins Caufield & Byers.
Square is doing well on its own, too, handling $10 million in daily transactions and aiming to process $2 billion in total payments for 2011. The San Francisco-based company, started by Twitter co-founder Jack Dorsey, is also expanding its services to various retail chains like Apple, Wal-Mart and Best Buy.
Despite its growing strength, however, Square faces competition from both NFC companies and now Intuit’s GoPayment, whose entry adds a new rival in what will likely become a drawn-out battle for supremacy in the mobile payment market.