Practical Ecommerce

Mobile Payment Processors Extend Reach with AppNinjas

The rise of mobile devices is affecting ecommerce. More consumers are using these devices to shop online and more merchants are using them to collect payments. We recently spoke with two experts in the credit card business about processing payments on mobile devices. They are John Waldron, CEO of Merchant Focus, and Derek Del Conte, CEO of innerfence, makers of Credit Card Terminal, a popular iPhone application. The two companies have just purchased another mobile credit card provider called AppNinjas, and they join us today to review that acquisition and the future of mobile payment processing.

Practical eCommerce: John, tell us what innerfence does and how you are working with Derek’s company presently.

John Waldron

John Waldron

John Waldron: “Merchant Focus processing was able to reach out to and structure a relationship with innerfence about 18 months ago. At the time, innerfence was writing an app for the iPhone and iPod Touch called Credit Card Terminal. It offered the ability for a merchant to take a transaction over a mobile device with their software connected to Authorize.Net as the payment gateway.

“We reached out to them when we heard what they were doing and started to court them about what Merchant Focus was doing and how we could potentially work together and assist them in maximizing revenue on their efforts. Instead of just being a software play, we painted a picture of mobile payment processing and how their soon-to-be reach to small merchants could generate a good amount of revenue for them. And, that by participating in a Visa/MasterCard interchange, they would be associated with the transactions that would be going through their technology.”

PeC: Derek, how is it going for you?

Derek Del Conte

Derek Del Conte

Derek Del Conte: “It’s worked out extremely well for us. Merchant Focus came in, as John explained, and really taught us a lot about the credit card processing industry. From our end, we’re obviously really strong on the software side, and so the combination has really allowed us to get somewhere with the overall innerfence/Merchant Focus solution.”

PeC: Describe the acquisition of AppNinjas and tell us what your two companies plan on doing with it.

Del Conte: “A little bit of background on the AppNinjas. It created an app called Swipe or iSwipe that is also a credit card terminal on the iPhone and iPod Touch and released it at the beginning of 2009. And, obviously we at innerfence were watching this. The AppNinjas made some really good progress with the Swipe app, and they made some headway into mobile processing, as well, through a combination of delivering a solid set of features. We are extremely committed to the emerging mobile market around credit card processing on mobile devices, and we watched what the AppNinjas were doing, and it made a lot of sense (given what we were up to) to really place an even larger bet on that, and that’s our plan now with the acquisition of the AppNinjas.”

PeC: John, can you describe the structure of the acquisition for us?

Del Conte: “The principals at Merchant Focus and the principals at innerfence formed a new entity called AppNinjas Holdings Incorporated, and that entity acquired the stock of AppNinjas. There were two principals there, Zander Ford and Bryan Kennedy, two of the co-founders of AppNinjas and the Swipe terminal. We had been courting them for six months and trying to work out a situation that would make sense for both parties. Innerfence and Merchant Focus had committed a decent amount of resources that we had set aside to do specifically what we accomplished with AppNinjas.

“We loved their direct approach, and there were some components related to hardware and what the features of mobile processing solutions look like. We were at a point that it was time to take it to the next level. We were just happy that we were able to come to terms and get them to where they were ready to take chips off the table and focus on something else, and we feel that we can take this thing to the next level.”

PeC: So, will both AppNinjas’ product and innerfence’s product, Credit Card Terminal, continue as they are now?

Waldron: “They will. They will maintain independence, marketing and branding and will both be out acquiring merchants directly.”

PeC: Are both products for iPhone and iPod Touches, and is there any Android applicability for either product?

Del Conte: “The current AppNinjas’ app is for the iPod Touch and the iPhone. Innerfence’s Credit Card Terminal app works on the iPod Touch, the iPhone, and on a new iPad version that we released when the iPad store opened. We’re looking into the other platforms–Android, Windows Mobile, Blackberry–but we’re still figuring out exactly what we want to do in those particular areas for both the AppNinjas and innerfence.”

PeC: What type of ecommerce merchant should be interested in your products?

Waldron: “Merchants that are doing any type of mobile business, trade shows, special events, any kind of event where they are selling a product or service outside of the ecommerce world.

“The great thing about both AppNinjas and innerfence is that both of those terminals connect to Authorize.Net. So, merchants are really not too far away from having the ability to have mobile card terminals in their pockets. As long as they have an Authorize.Net account, they could actually just download the app from the iTunes store, whether it is innerfence or the Swipe terminal from AppNinjas, and enter their API login and transaction key from their Authorize.Net account. That would enable them to immediately start processing on their iPhone or iPod Touch.

ListenListen to the complete audio interview with John Waldron and Derek Del Conte.

“The option is available as a key-entered transaction, but within the next 60 days, that option becomes completely converted to a retail physical terminal in your pocket. We will be launching a hardware device that the iPhone would connect with and enable the customer to not only take the credit card payment, but also take it as a retail swipe transaction. That will enable them to qualify for best rates with Visa and MasterCard interchange, much like any retailer does today when a card is swiped though a point-of-sales system.”

PeC: How will businesses be affected by this shift to mobile payment processing?

Del Conte: “I think there are two things that are happening right now. One is it makes processing payments a lot more convenient. You use hardware, such as an iPhone, that you already carry on you. You don’t have to purchase another device or configure something else. It’s just a lot easier and there’s a lot of convenience to be gained moving to mobile platforms like these.

“The second is you see a substantial reduction in cost as a merchant. You’re not purchasing the hardware, but you also aren’t setting up a separate mobile data plan to perform the transaction and (in the case of our offering) you’re not making long commitments. We don’t have a contract term with our solution.

“Also, the Swipe attachment that we have coming out for the iPhone will even extend those two qualities. Swipe is a lot more convenient for a merchant. You’re swiping the card instead of entering it. So, you can run transactions faster. And if you’re running cards at a Swipe’s rate, you’re also getting a reduction in cost on all of those transactions. So, the hardware is taking us out to a further level, and I think it is going to be a game changer in both the AppNinjas and innerfence businesses.”

Waldron: “Eighteen months ago, if you bought a wireless terminal, you’d have to sign a one- or two-year contract and the hardware is $500, $600 to $700, and the monthly data plan is $20. But the merchant might just need it for the weekend, or just for the summer. So, I think the mentality of the consumers and of merchants in general will be changing very fast when merchants are able to instantly take a credit card anywhere without any hassle.”

PeC: Anything else on your mind for our readers today?

Del Conte: “Being able to reduce the cost of getting set up to process transactions when you’re out on location is a huge piece of this for us. One of the things that we’re really focused on is keeping that cost down, enabling people to get set up and really working with merchants on a solution that may extend what they’re doing. And, a part of that is that our current plan offers the hardware free of charge to new merchants that enroll with either innerfence or the AppNinjas.”

Waldron: “Being a 14-year payment veteran, and seeing where and how ecommerce came to where it is today, I think it’s exciting for merchants to have an ecommerce solution that enables you, or any of your associates or employees, to have that payment solution with them at any given time. Obviously, it means more sales. It means more business for everybody and it’s exciting to think about how it all ties together and where we are now and where this all could go in the next five years.”

Del Conte: “I think John really nailed it right there. [Not long ago] an ecommerce merchant conventionally had to go set up a separate method of processing to deal with on-location transactions, and one of the things that I’m really excited about is with the solution that we have, merchants don’t have to go through that process to set up multiple accounts that deal with multiple entities to do both online and in-person transactions. That’s a really big key moving forward to reduce the amount of hassle that a merchant has to go through in order to process in both scenarios.”

Practical Ecommerce

Practical Ecommerce

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Comment ( 1 )

  1. Gidi June 2, 2010 Reply

    Innerfence and AppNinjas are indeed about to make a giant leap into hardware devices and physical processing environment.
    According to this article, both applications will support a “hardware device” (some kind of card reader) that will enable merchants to swipe cards instead of keying in transactions.

    Del Conte further implies that such swipe transactions will be considered as Card Present (“running cards at a Swipe’s rate”) and will also enable merchants to enjoy “both online and in-person transactions” using the same one solution/one merchant account.

    Well, I have my doubts…

    Even if Visa and MasterCard will approve the suggested solution as a Card Present scenario (which isn’t trivial – Verifone decided to disable the CNP scenario on their PAYware Mobile solution when they applied for a CP acknowledgment, which indeed they did), it is far from the vision of one solution for both scenarios: Card Present and CNP.

    As Innerfence and AppNinjas solutions both are using Authorize.net as a Payment Gateway, they cannot offer a combined off-line (CP) and on-line (CNP) account unless same is offered by Authorize.net.

    Authorize.net is not alone. All major Gateways and Processors do not currently support such combined accounts, so “hold your horses” on that vision for the time being…
    If you’re looking for an iPhone Credit Card Processing solution try http://www.CCPrUs.com. Compare the different solutions and go with the one that suits you best!

    Gidi Argov, Founder and CEO
    CreditCardProcessing-r-us.com