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BofA takes aim at Square with new mobile-pay service

Bank of America's service lets vendors use smartphones to swipe customers' credit cards. BofA is charging vendors 2.7 percent per purchase, just a hair below Square's rate.

Bank of America Mobile Pay.
BofA Mobile Pay BofA

Bank of America is the latest company to take on Square in the mobile-payments market.

The banking giant today announced a new service for merchants, called Mobile Pay on Demand. The offering includes a card reader that attaches to a smartphone, and allows merchants to handle transactions from the device. According to Bank of America, its service works with Visa, MasterCard, Discover, and American Express. The service will charge merchants 2.7 percent per swipe.

Square popularized mobile payments with its own card-reader-and-software combination. Square charges 2.75 percent on all transactions.

Bank of America has entered an already-competitive market for mobile payments. PayPal earlier this year launched its own mobile-payment service, called PayPal Here. Groupon followed suit in September with the launch of Groupon Payments.

The huge financial upside of mobile payments is drawing in companies. Square announced in September that it is processing $8 billion a year in transactions, up from $1 billion at the same time a year earlier. The company also raised $200 million earlier this year on a valuation of $3.25 billion.

To coax merchants to its product, Bank of America is offering a free, one-year subscription to its iDeals Marketing Platform Pro to those who sign up by the end of the year. The marketing service helps merchants create Web sites, distribute coupons, and offer Groupon-like deals.

(Via All Things Digital)