updated 03:25 pm EST, Fri December 14, 2012
Mobile payments deemed 'fundamentally unprofitable'
Payment processor VeriFone is withdrawing from the mobile card payments market, citing "razor-thin margins." The decision to shutter Square-competitor Sail came to light during a quarterly conference call, with CEO Doug Bergeron calling the market for low-volume merchant processing as "fundamentally unprofitable."
Sail opened for business earlier this year, offering customers a card reader that plugs into a smartphone, and while offering competitive rates of 2.7-percent of a transaction as a service charge, Sail also allowed customers to pay $10 per month to drop that rate down to 1.95-percent. By bundling a barcode scanning feature into the supplied app, it gave the option of cashier-free checkouts.
VeriFone will not shut off the Sail service completely, but will prevent new customers from signing up. Existing card reader owners will receive third-party partner customer support as well as maintain existing hardware and payment gateways, according to TechCrunch. Though the system will no longer be offered in the US, a version for markets using chip-and-pin instead of magnetic strips in their cards is apparently in the works.