Erply Squares Off in Mobile Payments Space

Erply, a company that specializes in retail management software, is introducing a new mobile credit card reader that will face off directly against existing readers such as those made by Square and Verifone, and indirectly against mobile payment systems such as Google Wallet.

The device, unveiled today, will transmit a customer’s encrypted credit card data to process payments, and it is designed to connect to an iPad when it launches, and will work with the iPhone within the next three months. Priced at $50, with a 1.9 percent per-transaction fee, the Erply credit card reader can also be used for near field communications (NFC) payment options, which are just coming to market.

“As technology changes, we are giving consumers the ability to pay for items the way they want to, whether it is with cash, credit cards or with NFC technologies in phones,” Kris Hiiemaa, CEO of Erply, said in a release announcing the initiative. Because the device is attached to an iPad, it lets sales staff process transactions on the sales floor, a convenience that Apple stores already offer.

The introduction of Erply's reader comes at a time when retailers are faced with an array of choices through which their customers can make payments, and a rising niche for technology companies. ABI Research anticipates retail technology will grow to nearly $21 billion in 2014 from $14.8 billion in 2009.

Square, Verifone, and Intuit also offer gadgets through which customers can make payments, and the competition is getting increasingly heated. As TechCrunch points out, Square—which seems to be the fastest growing choice among small businesses and offers its gadget and software for free—recently dropped its 15 cents transaction fee and charges a flat 2.75 percent fee, and Intuit’s GoPayment reader did the exact same thing.

Then, there’s Google, which recently partnered with Citi, MasterCard, and more than 20,000 merchants including Macy’s to field test the Google Wallet, a software system that uses NFC technology and has consumers tap their phones on retailer-installed gadgets to make payments. Google is making the technology needed for the payments available via a Sprint phone, the Nexus S 4G by Google. But the tap and pay system hasn't gone off without a hitch: The day after the Google Wallet was unveiled, it prompted a lawsuit from PayPal, and parent company eBay, accusing the company of unfairly gaining access to its ideas.

The advantage for retailers to use Erply, according to Hiiemaa, is that the payment system connects with a retailer’s inventory management system, meaning that every purchase is instantly recorded, and the retailer knows what is and what is not selling. The catch: As the company says itself, the Erply reader works exclusively with the Erply’s point-of-sale and inventory management systems, which give retailers the ability to view real-time data and inventory analytics as they ring up customers.

More than 20,000 retailers, big and small, have opted into Erply’s retail inventory management system, which starts at $70 per month. But if you really want to take advantage of Erply's payment system to the maximum, you would have to buy into the inventory management system too.

Ultimately what this means for merchants, who have for years griped about the transaction fees they pay to credit card companies, which range from 2 to 3 percent, whenever a customer pays on credit, is that they will have to do some math and figure out which one of a growing array of options is the most cost-effective for their business.

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Teresa Novellino writes for Portfolio.com