Bank of America has decided to compete with tech companies like Square, PayPal, Google and LevelUp for the small business market.
The bank announced its plan to launch a mobile payment system, which would allow small businesses to charge customers by swiping their credit cards through a card-reader attached to smartphones or tablets.
Until now, the mobile payment space has been populated by tech companies presenting themselves as an alternative to big banks, which often charge small businesses high rates for each credit card transaction. Services like Square’s or PayPal’s, for example, charge businesses a flat swipe fee of between 2.7 and 2.75 percent — whereas swipe fees from banks can exceed three percent, which some small businesses say they found crippling. These start-ups also don’t charge any monthly or annual fees, whereas banks traditionally do, in addition to swipe fees.
Bank of America is the first bank to enter the mobile payment space, offering a swipe fee of 2.7 percent on Visa, MasterCard and Discover cards and no annual fees — comparable to Square and PayPal. A higher fee applies for keyed-in transactions (when the card isn’t physically swiped), and the rate for American Express card swipes will be negotiated with each small business.
While anyone can sign up, businesses with Bank of America checking accounts can have their payments processed faster as they’re already integrated into the bank’s system, according to the bank.
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