December 13, 2012

Last month Bank of America launched Mobile Pay on Demand, a mobile point-of-sale solution that accepts card payments through an app and card reader that attaches to smartphones and tablets. As Bank Systems & Technology noted at the time of the product's release, Mobile Pay on Demand puts Bank of America in direct competition with the likes of Square and PayPal and their mobile card readers. Mobile Pay on Demand is a direct challenge to those tech companies in an area where they were better established than any bank, and how well the bank can compete with them will be interesting to watch.

Bank of America, which is based in Charlotte, N.C. with $2.18 trillion in assets, has two advantages over its competitors in the mobile POS market, says Tom Bell, CEO of Bank of America Merchant Services. The first advantage that he points to is the broad array of merchant services that the bank already offers that it can bundle with Mobile Pay on Demand. Bank of America already has a relationship with more than 300,000 merchants that it serves with deposits, loans and treasury services, he says. "We have everything that a merchant needs to accept payments," Bell comments. PayPal and Square simply doesn't offer the same range of services.

The other advantage Bell relates - one that is often brought up when discussing competition between banks and non-banks - is brand trust. Banks are regulated; PayPal, Square, LevelUp, Groupon and the other technology and retail players in this space aren't. Many merchants and customers therefore confer more trust to banks. "Bank of America has a trusted brand, and merchants like that," Bell says. "Consumers walking up to pay will see the Bank of America logo… And they trust that brand."

Like Square's mobile card reader, Mobile Pay on Demand makes the most sense as a solution for small businesses, Bell says. Bank of America is increasingly focused on the small business customer segment, Bell relates, as the bank recently hired 1,000 small business specialists to help support small business customers. Offering a mobile card reader is a natural extension of that campaign, he reasons. And as more innovations in technology allow small businesses to self-support, he predicts that small businesses will become a more profitable segment for the bank.

Bell says the bank will continue to leverage its advantages to stay ahead of that technological innovation and competition when it comes to the point-of-sale. "We're going to be in the middle of the revolution at the point-of-sale," he promises. That revolution will include not only the introduction of new mobile point-of-sale solutions, but also the integration of mobile payments - both NFC and cloud-based - and EMV cards. "Helping [merchant] customers deal with these integrations will be big," Bell predicts. "It'll be an interesting journey in the next three to four years. It [point-of-sale innovations] will be as impactful as tablets and smartphones have been."

Jonathan Camhi is a graduate of the City University of New York's Graduate School of Journalism, where he focused on international reporting and interned at the Hindustan Times in Delhi, ...