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Truly mobile payments made hard – iZettle vs. the banking world

According to the blog post on iZettle’s web page – they stopped accepting VISA cards in Denmark, Finland & Norway. I can confirm that because on 2nd of August I was trying to pay with my VISA to a very satisfied iZettle merchant. Nobody can say what is really going on – just like in case of patent trolling (“You infringe!” – “Name patents?” – “I can’t”). Is it the beginning of “bank trolling”?

iZettle is indeed a great product – no questions asked. It is easy to use, no hidden fees, no tedious paper work – and if you have an iPhone (Android in beta stage as of Aug 2012) – you also have a terminal (iZettle provides a special card reader you plug into your phone). From what I could see the product was coined a success by entrepreneurs and their customers (I stand here). That was enough to create a problem.

NETS is owned by banks – and they make money on fees. The volume of credit/debit card transactions is enormous – so this is definitely not a market to ignore. It seems that the problem might lie in a simple fact – a large amount of “could be customers of NETS” suddenly is represented by iZettle (allegedly resulting in a smaller cut for NETS).

Why do I say “could be customers”? Well, renting a credit card terminal isn’t cheap and there’s a bit of paperwork/waiting time involved, too. Such combination makes credit card payments rather unattractive for young entrepreneurs that “don’t have the volume, yet”. iZettle picked up that niche – which turned out to be not so niche after all if the case ended up in VISA HQ.

“Monopoly” is bad for business. It’s even worse for the customer (degraded quality, higher price). In this situation it’s also inconvenient for current and prospective customers (as they have to make it to the nearest ATM in the end). So we are back to the point, that it’s bad for business… because the customer that leaves your shop might not come back again…

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