Why hasn't a company come out with a mobile payment processor?

Why hasn't a company launch an international mobile payment processor that pays directly into bank account utilizing mobile phone? Square beat Paypal to punch inducing mobile payments but why hasn't a company launch an international platform were individuals, merchants and freelances can get paid for their products or services using their mobile phone no matter which network provider they're mobile service is with?

 

It's not a bad idea, but it would be a fraud and regulatory nightmare.

For starters, the US has laws regarding banking and credit card processing such as Know Your Customer (KYC). This effectively precludes any US processor from providing payment services directly to non-US merchants. US processors can't even deposit into a virgin islands bank account much less an IBAN / SWIFT account in another country. The way Paypal and others get away with it is by partnering with non-US banks, but this would require a huge amount of cash for reserve to cover fraud and chargeback loses. So the other option would be an offshore processing bank doing the processing. The problem with this approach, is that the fees tend to start at 5 - 10% in processing fees, and that's assuming that they fully understand the risk that comes with the account. Aggregating accounts like this could easily cost 10% per transaction plus a continuous reserve of 20% or more.

Second hurdle is EMV. Many European banks require EMV for processing swiped transactions. The US is slowly moving towards EMV and we should see a much more rapid adoption in the next 2 years. Square's reader isn't even encrypted, while Paypal's and most other are. Even with an encrypted reader, it's going to be nearly impossible to certify an EMV or PIN entry reader for a smart phone. Someone would have to rethink the entire process from the ground up if they ever wanted to get EMV or PIN debit working on one.

The largest hurdle in my opinion would be the amount of fraud. It's very difficult to effectively control fraud domestically let alone across borders. This is compounded when there is no verification process to get setup, such as is the case with Square or Paypal. Even with extremely aggressive account hold policies, which tend to piss customers off a lot, I can't see this possibly being profitable over the long term with a processing rate that's competitive.

I dare say it will never happen, at least not at a cost of anywhere near what square is charging.

 

Jestep with your explanation I think that I could see why Paypal does not have a lot more competition. It seems to be quite complicated to work in this field.

Like you Muffet, I believe that permitting merchant to sell their products through mobile payment could actually help increase the number of transactions. Moreover, better conversions could perhaps be witnessed with mobile marketing as a result.

 

Jestep has basically said all that is needed.
Just another note, the security via phones is still quite shaky compared to that of a computer so this would be a bit of a hurdle. I don't think there are too many companies that would really want to deal with this just yet due to the fact they may not be able to maintain a complete secure processing environment.

 

Exactly my idea, but as written above, the current rules makes this hard, but it will be a great product.

I think if the service is sending it directly, all our current money sending agencies need to close, like WU, money gram etc. So the big guys use the rules to protect their current service.

If the service will send the money direct from your bank account to another bank account, without having the money it will be great, because it can not be frozen or what ever. Problem, when abused, you cannot get your money back.