iPad; Therefore iSell

Image via CrunchBase

I was in a restaurant recently sitting at the counter with my iPad. Yes, I love my toy. The restaurant’s owner, sitting next to me on his netbook, was more than a little jealous. He first asked to take a look at it and then told me that without ever having touched or even seen one in person, that he had already approached a friend who works for Apple about software to use the device as a mobile Point of Sale (POS) platform. This is truly the case of a company creating a market for product out of thin air.

But what is the reality of the iPad becoming the first ubiquitous mobile POS device? While it seems reasonable to envision a large touch screen device serving as a brilliant order-inputting, inventory-tracking, payment-accepting, all around interactive customer device, The Funds Transfer Alliance staff has yet to see any industry-marketed software that really speaks to its potential.

While my restaurateur companion asked a logical person, an Apple employee, about potential software, much of the Apple (and now Android) devices’ overwhelming success has been the result of third-party application developers. And while several mobile payment developers, including the folks over at the highly anticipated Square Inc, have jumped on the iPad bandwagon, the race to the market’s pole position still seems wide open.

One such company that’s interested and trying is MagTek and their QwickPAY platform. Because this program is not specific to the iPad, even though it works well, it’s doubtful the current iteration will change the mobile payment game. Meanwhile, Inner Fence’s Credit Card Terminal, originally designed for the iPhone, is decent; it does nothing to capture the essence of what my friend was looking for when he inquired about a totally workable mobile POS device other than saving frequent customer info. There are several other very simple iPhone apps that allow basic account information to be inputted that have been increased in size to fit the iPad’s screen, but not its potential.

Image via CrunchBase

Square, mentioned above, is a unique platform that has a lot of buzz and an equal amount of red tape to work through. While they seem to be well on their way to market, they are still beta testing and working out some legal issues. However, at its core, the Square platform is designed to be a person-to-person payment system and not necessarily for business, although they do offer receipt itemization and the ability to break out sales taxes. Additionally, purchasers can sign their name to the receipt, which can then be emailed. Square also offers a free microphone jack card swiper for card present transactions, which is 2.75% plus $.15 and for card not-present transactions the rates are 3.5% plus $.15.

While customer experience and ease of payment for very small businesses is the most obvious use for this device, there are others as well. For certain businesses, a great POS system means a great inventory management system. Because of the Bluetooth, WiFi, and 3G capabilities of the device, not to mention the much more user-friendly screen real estate compared to a similarly enabled phone, the iPad has the potential to serve as an inventory management tool in countless business systems. Additionally, large retail and department stores outfitting their sales reps with a tool that can track merchandise, accept payment, and submit orders. The check out counter now finds the customer.

Once reason developers may be hesitant to spend the resources creating such an app is the App Store approval process. While Apple claims to approve somewhere in the range of 95% of applications within a week of submission, there’s a general feeling in the community that it’s much more difficult than that to get an app approved. And since every tech and social media company seems to have interest in entering the payment industry, knowing that making an amazing app could actually create approval problems, even if it’s just the perception that Apple might someday view it as competition, might be enough to deter certain developers from investing the necessary resources on production and the legal framework necessary to make it work. Apple’s official position is that they haven’t given much thought to how the iPad is going to change the digital payment landscape.

The last, but certainly not the least of the hurdles facing business hoping to use this gadgetophile’s payment gadget of choice is breakage. Dropping the thing. Ideally, servers will be carrying it around restaurants. Customers will take it to digitally approve their transaction. Accidents happen. Water is spilled. Thefts are a reality. These devices will have to be well insured and well protected. Payment Card Industry (PCI) Compliance could be a real issue considering all the people who will have their hands on it at any given time.