FNB will hand its merchant customers mPowa dongles that, used with an app, will enable them to take card payments through their mobile phones. The bank will embed mPowa tools and software into its merchant services so that it can tailor the look and identity of the service.

Jacques Celliers, CEO, FNB Business Banking, says: "The South African economy requires an entrepreneurial culture to be incubated and supported from all stakeholders. Thousands of our small business clients are in the services industry and a fixed merchant device is not of much use to them. This new technology promises to allow our customers to accept card payments anywhere, anytime."

Dan Wagner, chairman and CEO, mPowa, claims that he is in talks with "a number of companies" about following FNB and introducing a white label version of the service.

Says Wagner: "This deal validates our white label strategy, which in itself is a vital part of how we plan to take hold of the global mobile payment market. We have aggressive growth plans and are looking to rapidly increase take-up of our service as more companies capitalise on the business benefits that mPowa delivers."

In a separate development, the company has told Finextra that assertions it made last week through Twitter and Facebook that customer swipe card readers are now useless for Visa transactions are not true. The firm had told users that the problem would persist until a new chip and PIN-based dongle was rolled out by the end of the year, telling one user on Twitter who received her dongle just the day before that it was now useless:

Responding to the @PaigeRobbinsUK's tweet asking "@m_Powa hmmm. I got mine yesterday? So does this mean its unusable?" it responded, in a now deleted message: "Unfortunately yes, we are currently migrating to the chip 'n' pin devices."

Meanwhile, on Facebook it said: "We are very sorry you have been inconvenience in this way, however we have to work within the boundary of card acquirers for that reason we have had to accelerate our migration to chip an pin and as part of that the retirement of our stripe reader."

In another post, it said: "The migration first affects Visa, and so we've switched off Visa transactions until the migration is complete, and we'll keep you updated as we progress."

Yet now, the company has deleted tweets says that the "communication was in error" and that: "mPowa continues to accept all cards - Visa, Mastercard, Amex and Diners".

Wagner has told Finextra that the firm was not, like rival iZettle, forced to stop accepting Visa transactions but says that he does not want customers to use their swipe dongles and could reject any transactions.

The entrepreneur admits that the customers who have received the readers - only around 200 - have been let down by mPowa because it tried to enter the market too early. He now says that he does not think the dongles, which were still being sent out as late as last week, offer enough security.

The firm had initially planned to provide users with two readers - one chip and PIN and one magstripe. However, this has been abandoned and mPowa is now building a three-in-one device, which will cover both options, as well as swipe and PIN. It should be delivered by the end of the year but in the meantime customers are advised to ditch their current reader.