A Bank of America affiliate announced Tuesday it has created a mobile payment system for businesses, joining an increasingly competitive field popularized by startups like Square.
The system, called Mobile Pay on Demand, allows businesses to accept payments using a smartphone or iPad through a secure card reader that plugs in, plus a free app.
The company is not planning to charge monthly fees for the service. Instead, businesses will pay 2.7 percent per swipe. The service will be available starting Dec. 3.
Clearly, smartphones and now tablet technologies are becoming ubiquitous, said Tom Bell, CEO of Bank of America Merchant Services, in an Observer interview. Now its up to each of us to innovate in that space. We feel weve brought a product to market that is innovative.
Bank of America Merchant Services is a privately held company jointly owned by Bank of America Corp. and First Data Corp.
Tuesdays announcement comes as Bank of America has increasingly moved into mobile technology, both on the consumer and business sides. CEO Brian Moynihan touted the banks 11.5 million mobile banking customers during an investor conference Tuesday, and he said the Charlotte bank is still signing up 50,000 to 60,000 new customers each week.
The bank has become one of the first major banks to release new mobile banking tablet applications for iPad and Android devices.
The company will have to catch up with Square, one of the first to introduce the technology. It processes about $8 billion in annual payments. Square inked a deal with Starbucks earlier this year allowing coffee buyers to pay using the Square mobile app. The Square service has about 5,000 customers in the Charlotte area.
PayPal, Intuit, Groupon and Google also have products in the mobile payments realm.
Bottom line here, this seems like just another mobile payment option, wrote Robert Nelson of TechnologyTell. Of course, if you are already a happy Bank of America customer this could be the option you had been waiting for.
Bell said the bank spent the past year designing the technology and the physical card-swipe reader to differentiate it from others on the market.
The reader itself has been designed to fit better with different types of smartphones and the iPad, he said, and to cut down on swiping errors.
Money will also show up in a customers account as soon as the next day, as opposed to longer waiting periods with other services, Bell said.