Are You Ready for iEconomy?
Jack Dorsey's Square, Incase, Verifone and now Mophie — these companies' credit card readers are turning the iPhone/iPod touch platform into an e-commerce engine. — Mophie, a Los Angeles-based company that makes accessories for the iPod/iPhone devices …
Context & Ripple Effects
The iPhone-as-cash-register race has been building all winter: after Jack Dorsey's Square launched its reader, VeriFone moved fast to follow Square with its own iPhone payment system in December 2009. Mophie's entry matters because it is not a payments company — it is one of the best-known iPod/iPhone accessory makers, which signals the card reader is becoming a standard attachment category rather than a specialist product.
With Square, Verifone, Incase and Mophie all confirmed in the market by January 2010, the fight is over who owns the physical dongle and the processing relationship that rides on it — a land grab for the smallest merchants and individual sellers that traditional terminals never served.
First-order effects
- Mophie puts an accessory-maker price and retail footprint against Square's startup distribution and Verifone's enterprise payments pedigree, giving small merchants three structurally different suppliers for the same function.
Second-order effects
- Reader hardware on the iPhone's dock connector heads toward commodity pricing, pushing competition down into transaction fees and software services where Verifone's processing business and Square's fee model collide.
Third-order effects
- If accessory makers keep shipping readers, Apple's device ecosystem absorbs the point-of-sale layer itself, shifting leverage from terminal vendors toward whoever controls the app-store-distributed software attached to each swipe.
The trend: Consumer smartphones are turning into point-of-sale terminals, with payments incumbents, startups and accessory makers racing to own the reader-plus-fees layer of the iEconomy.