Similar to the dongle pioneered by mobile payments processing firm Square, the FreshBooks card reader plugs into a smartphone audio jack to enable payments acceptance.
FreshBooks is charging 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 FreshBooks reader accepts both magnetic stripe cards and the new security-focused EMV chip cards.
For FreshBooks, a foray into mobile payments is really not much of a risk. Up until now, FreshBooks has focused on small business tools for invoicing, time-tracking and expense management. Going forward, the low-cost payment hardware can be offered as an add-on to merchants already tied into the company's software ecosystem and might even lure future customers due to the payments /invoicing combo.
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.