SumUp’s mobile payment masterstroke – a version of Square Wallet for Europe

Nina Fowler 2013-02-12 5

record store

Berlin-headquartered mobile payments company SumUp is readying a new app called SumUp Pay that it hopes will give it the jump on rivals in Europe.

SumUp Pay – still in closed testing phase – is a frictionless mobile payment app similar to Square Wallet. It allows customers to pay merchants who also use the app simply by saying their name and without taking either their phone or wallet out of their pocket. 

The company previewed the new app at Finovate in London this morning. It plans to release it later this year.

The future of mobile payments is… frictionless?

Stefan Jeschonnek“We were thinking a lot about how the future of POS interaction is going to look,” explained SumUp Managing Director Stefan Jeschonnek (right).

“How to make the POS experience as good as possible and as seamless as possible – part of that is to make payments completely frictionless,” he said. “We got to the point that we’d basically have to redefine how we traditionally think about payments.”

How SumUp Pay will work

Enter SumUp Pay (and Square Wallet and Google Wallet in the US). It’s a new mobile app for customers designed to work in tandem with SumUp’s existing “plug and pay” card reader and app for merchants.

Customers download the new app, link credit card details, pre-authorise select merchants and can then walk into a store, say their name, grab a coffee (or whatever else they’re after) and can effectively walk out. 

Merchants will need to update to a new version of SumUp’s existing app. Once they do, their phones will pick up customers using SumUp Pay in the store and deliver push notifications with names, photos and “top three purchases”. The merchant – if she or he is pre-authorised – can then check a customer’s identity against their profile photo and process a transaction within the app. Once it goes through, both will be notified.

SumUp Pay

The app’s makers liken it to the old days when storekeepers knew local customers’ names and added purchases to a ledger for the end of the month. “When you go and shop for jeans at a boutique or at a small secondhand store, all the way to an arts and crafts market… You can really see this working everywhere,” Jeschonnek said.  

Customers not interested in using SumUp Pay – or not for that particular merchant – will still be able to pay via SumUp’s card reader as per normal (or with good old cash).

“We think in five years a majority of people will pay this way but there will still be some people that want to pay with cash and some that will want to pay with cards.”

The new method, like the existing app and card reader, will charge the merchant a 2.75 per cent fee for each transaction. SumUp Pay will work with all major card types.

SumUp bringing in “several thousand” new sign-ups per week

SumUp’s existing app and card reader for merchants is doing “amazingly well,” Jeschonnek said. The solution is now used by “tens of thousands” of merchants across Europe with “several thousand” new sign-ups each week, he said. 

That traction will be key to the new product’s success – customers will only be inclined to use the app if there are enough merchants already on board.

It’s not clear how much of a head start SumUp has on this. In addition to Square’s stated plans to go international, SumUp’s competitors in Europe include Sweden’s iZettle and well-funded Rocket Internet portfolio company Payleven. Neither of those two rivals currently has a solution like SumUp Pay on the market but – if it proves popular – it’d be fair to expect at least one to follow.

The huge amount of interest in new ways to process in-store payments means it’d be naive for Square to expect an open field waiting for it in Europe. SumUp raised a multi-million dollar Series A round back in August; Payleven a new round last month. 

And why not? It’s a lucrative market. Most transactions – up to 90 per cent, according to Jeschonnek – still happen offline, in the real world. “It’s the problem left unsolved.”

Featured image: record store, by Flickr user Libertinus; other photos courtesy of SumUp

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