FreshBooks dives into hardware with mobile card reader for SMBs

The Toronto-based startup is now looking to the tiny piece of ubiquitous hardware to bolster its competitive edge.


Cloud accounting provider FreshBooks has spent the last several years building out its software suite for small business financial management.

But in a space that's grown increasingly crowded, the Toronto-based startup is now looking to a tiny piece of ubiquitous hardware to bolster its competitive edge.

The company on Wednesday announced plans to offer a mobile card reader that lets merchants accept credit card payments through a smartphone. Similar to the dongle pioneered by mobile payments processing firm Square -- and subsequently replicated by a bevy of technology providers -- the FreshBooks card reader plugs into a smartphone audio jack to enable payments acceptance on the go.

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The card reader is the first piece of hardware to be offered by the company.

FreshBooks plans to charge merchants $29 for the card reader, plus 2.7 percent + $0.30 for each Visa and MasterCard transaction, and 3.4 percent + $0.30 for American Express transactions. The company loses some steam here, as its rates are significantly more expensive than Square's and several other mobile payment options on the market. The FreshBooks reader will accept both magnetic stripe cards and the security-focused EMV chip cards.

For FreshBooks -- a company that has, up until now, focused on small business tools for invoicing, time-tracking and expense management -- a foray into the highly competitive world of mobile payments is really not much of a risk. The low-cost hardware can be offered as an add-on to merchants already tied into FreshBooks software and might even lure future customers due to the payments /invoicing combo.

It's also indicative of a larger trend the accounting software space.

FreshBooks' primary competitor in the United States is Intuit and its QuickBooks ecosystem of small business management tools. Intuit has offered its GoPayment mobile payments dongle for some time and recently upgraded the reader for EMV compliance. Intuit also has ties to Square, allowing merchants to automatically import all payments processed with Square into the QuickBooks ecosystem.

There's a clear benefit to combining sales and transaction data with accounting and invoicing tools. In the case of FreshBooks, the card reader gives the company a fully integrated point-of-sale system that plugs directly into its broader accounting and payments offering. The key selling point is that invoices and reports can be synced in real time as each payment is processed.

"Since day one, FreshBooks has been committed to helping service-based small business owners save time, get paid faster, and look professional, and the FreshBooks Card Reader is the next step as we continue delivering on our promise," said Mike McDerment, co-founder and CEO of FreshBooks. "Seventy-five percent of small businesses already use mobile devices to run their businesses, and the FreshBooks Card Reader will offer them with yet another way to streamline their workflow while on-the-go."

FreshBooks is now inviting small businesses to apply for early access ahead of the card reader's launch in the U.S., expected in the first half of 2016.