PayMate, the mobile payment company, has launched a PayPOS mobile application, which allows small businesses to accept credit and debit cards and process electronic transactions directly on their mobile phones at the point of sale (POS). The application has no setup fee, rentals, variable fees or minimum transaction threshold.

How this works?

Merchants with a Smartphone or tablet (Android, iPhone, and iPad) can download the PayOS app on their phone. The merchant, after registering with the service, will be provided a Merchant ID (MID) and a Device ID (DID) that will enable him to use his mobile phone as a POS device and have the Merchant name show in the customer’s card statement. Following that, he just needs to enter his mobile number and the amount on his smartphone. The customer enters the card details and the secure password or OTP. The transaction is then processed in real time.

The credit card payment gateway fee of 2.95% + taxes will be charged over and above transaction amount during settlement. However, merchants can also pass on the fee to the customers by including it in the total amount they charge their customer on the app while initiating the payment. In the international markets, payments company PayPal charges 2.7% for payments through its ‘PayPal Here’ mobile payments solution, while Square charges 2.75%.

   

PayPOS currently supports Visa and Master Card credit cards and debit cards. Apart from charging the customers, the PayPOS app also allows them to track sales, manage reports, create promotions that merchants can send out to their customers, and view customer lists. At the time of writing this, we have downloaded the app on our Smartphone but haven’t received any signup confirmation email from PayMate.

Payment terms for merchants

Merchants receive money on a T+2 working day basis in their linked bank account. However for the initial two months PayMate will hold back 30% of the merchant’s transaction amount. The remaining 30% amount will be settled by PayMate after every 15 days from the day of the transaction along with other due payments. After 45 days of satisfactory performance, the company will not hold back the 30% and will settle the complete amount.

Security?

According to PayMate, each PayPOS application has a unique and secure login, and customer card data is never stored on the handset. The company says that all communication between the application and the payment gateway server is encrypted.

Our Take (By Anupam Saxena) 

But this is essentially using an online payment gateway for offline transactions, and will also involve an additional step for the customer- of entering the card details including the card number, CVV code and the 3D secure Pin or an OTP, which would make it a little cumbersome compared to swipe and pay terminal solutions. Also, some customers could be finicky about paper receipts.

Update: PayMate co-founder and Managing Director , Ajay Adiseshann, informs that the solution supports Debit Cards and receipts are sent to end-users via e-mail. At the moment, PayPOS does not accept Debit Cards, so it’s only limited to payments from customers with Credit Cards, and fit for payments at mobile kiosks or card on delivery. But then, successful transactions would also depend on the mobile internet connectivity (2G/3G/Evdo), and payment gateway up-time. So we still don’t think it’s an out and out POS terminal replacement. However, it’s a good step in terms of  initiating a mobile based merchant side payment solution, since we don’t have something like Square or PayPal Here, available in India. Perhaps PayMate could extend the functionality of the service by adding a physical reader or maybe use the phone’s camera for scanning cards. Adiseshann also informs that the company intends to introduce card readers, shortly.

We did report that  PayPal intends to apply for a domestic payment license in India, but then we don’t know if it’ll extend ‘PayPal Here’ to India, and whether the regulatory framework in the country would permit it.