Small businesses wanting to accept credit and debit cards have plenty of choices in the USA, where swipe readers like Square are readily available, but far fewer in Europe, where a more secure smartcard technology called chip-and-PIN is used in place of magnetic stripes and signatures.

European cards have a tiny embedded chip with encrypted information stored on it. This includes a four-digit PIN number. To make a purchase in a store, the customer inserts the card into a reader and then enters their PIN on a keypad. The chip verifies that the PIN is correct before passing the transaction details through to the card company for authorisation. All in-person Visa transactions in Europe must use chip-and-PIN (there is a fallback option to swipe with signature, but then the merchant takes on the risk if the card turns out to be counterfeit or stolen).

Conventional chip-and-PIN terminals are expensive, typically costing $350-600 a year in rental fees – a pretty steep cost for a small business …


A conventional chip-and-PIN retail terminal

What Payleven offers is a small, Bluetooth-enabled chip-and-PIN reader that interfaces to an iPhone app. There are no rental fees, just a one-off purchase cost of £100 (around $150). There is then a transaction fee of 2.7 percent.

With a great deal of confusion and nervousness in the market, a chip-and-PIN solution for small businesses which has Apple’s blessing is likely to prove extremely reassuring.

(Via The Verge.)

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