Heartland Payment Systems today unveiled a mobile-payment device for merchants called "Mobuyle" that works with any Android phone or tablet to handle customer card payments.
Mobuyle represents a direct jab by a more traditional payments processor against Jack Dorsey's Square, the hand-held mobile-payments device that a few years ago shook up the industry because the novel Square simply plugged into a iPhone (and now also works with Android). Heartland's CIO Steve Elefant claims Mobuyle is more secure than Square, and transactions fees made using it are expected to result in lower fees to merchants.
"The concept is similar but our encrypted reader is secure," Elefant says. "Square's reader swipes a card and the entire number is in the clear." Mobuyle, which is hardware that works with Android devices through software that can be downloaded from Android Market, makes use of encryption based on the Advanced Encryption Standard (AES) to shield cardholder data, he says.
Elefant claims that the Mobuyle hardware-based encryption is secure enough that even if a user's Android device is compromised or "has unlimited malware on it," the payment-card information will be captured securely and sent on through the Heartland processor network.
Heartland suffered a major network breach disclosed in early 2009 which costed the company tens of millions of dollars in fines to Visa and other payment brands.
In the wake of this devastating breach, Heartland's executive team, which argued the industry lacks adequate defense in point-to-point encryption, moved aggressively to bring in its own designed encryption processes and equipment intended to protect data between the merchant and the Heartland network.
Elefant says the Mobuyle device, which costs $75, will incur lower transaction fees to merchants than the Jack Dorsey Square, which he says typically run 2.7% to 3.1% per transaction. He says the Mobuyle will cost more like 25 cents per transaction on the Heartland network, which should show savings especially in higher-dollar transactions on Mobuyle. "This could be 25 cents on a $1,000 transaction," Elefant pointed out.
With Mobuyle, Heartland, which has 250,000 merchants in the U.S., is seeking interest from "brick-and-mortar" businesses that might view the hand-held device as a way to easily add point-of-sale terminals during busy periods when lines get long. Mobuyle works with secure card swipe or manual entry and includes electronic signature capture, GPS location capture, merchandise picture storage and voice authorization capabilities. Merchants can accept card payments even if the Mobuyle is out of range for cellular or WiFi access with a store-and-forward function.
One question is whether the Mobuyle is expected to meet with any requirements from the PCI Security Standards Council, which sets rules for organizations accepting payment cards or processing them. The council, however, has said it's undertaking a complete review of the mobile-payments market. Bob Russo, general manager of the council, this week said he expected the council to weigh in on mobile-payments technologies by year end.
Elefant, who says he's on the council's board of advisers, says Heartland feels it has to lead in getting its mobile-payment device into the market, regardless of whether the council has prepared security rules and guidelines yet. "The council does serve an important role," he said, but "Sometimes it leads, sometimes it lags."