MPowa reports First National Bank deal; denies own claims on Visa acceptance

MPowa reports First National Bank deal; denies own claims on Visa acceptance

UK Square-clone mPowa says it has struck a multi-million pound deal with South Africa's First National Bank (FNB). Meanwhile, the firm has denied claims made by its own staff that it can no longer process Visa transactions.

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.

Comments: (3)

A Finextra member
A Finextra member 02 October, 2012, 01:13Be the first to give this comment the thumbs up 0 likes How about NFC?.. Not that it matters: Square copycats failed to grasp the message from Jack - you don't need an external device to accept card payments...
A Finextra member
A Finextra member 02 October, 2012, 07:34Be the first to give this comment the thumbs up 0 likes

What about payment security and these mobile phone add ons? I see that the European central bank is requiring chip and pin at point of sale as the prefered and allowed solution. Furthermore the recommendation is to go for minimum level DDA or even CDA chipcards. So far pos devices have had clear functional and security requirements among these chip+pin, mag stripe reading, signature option and PCI DSS compliance. And the legal requirement of giving a receipt. Is it possible to meet all these requirements with an iPhone + a "dongle" taking into account the open and unprotected environment in the mobile phone. Normally even the smallest pos device is more sizable than the iPhone. Is there a risk that the iPhone will become an expensive modem to a fully compliant add on device? And that the complete kit will be bulky. Or is there a special provision with lower functional and security requirements applied by Mastercard and Visa since this is the new sexy mobile payments tool? And who will foot the bill when the payment credentials of the general population have been compromized by devices not meeting functionality and security criteria? Or am I completely wrong and these "dongle-designers" have realized something the verifones of the world missed in secure and functional design?

A Finextra member
A Finextra member 02 October, 2012, 08:34Be the first to give this comment the thumbs up 0 likes

@ Anon

"as the prefered and allowed solution" - isn't that a contradiction? That's your answer. There are many ways to skin a cat. Security does not have to mean "chip and PIN" - think of PayPal (in a retail environment).