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Square Competitor ShopKeep Giving Away Free Equipment to Accept Apple Pay

The giveaway underscores the fierce competition among new companies to get small businesses to upgrade their checkout systems.

Vjeran Pavic for Re/code

ShopKeep, a startup that makes checkout software for brick-and-mortar stores, has a new deal for new customers: Free equipment that allows them to accept mobile payment methods such as Apple Pay, in addition to a new, more secure type of credit card.

The equipment, which will cost current ShopKeep customers $259, includes a technology called near field communication, or NFC, that allows customers to pay using information stored on their phones. Apple Pay and Google Wallet use this technology as the backbone of their payment products.

Perhaps more importantly, the equipment can also be used to accept a new type of credit card — known as EMV chip cards — that are currently being issued by credit card companies in the U.S. to help reduce credit card fraud. The EMV card technology, named after the original technology developers Europass, MasterCard and Visa, has been common in Europe for a decade and makes cards harder to clone than the traditional credit cards that are still common in the U.S.

The giveaway underscores the fierce competition among young companies such as ShopKeep, Square and Poynt, as well as bigger players like First Data, to get small businesses to ditch their clunky point-of-sale equipment for newer, modernized checkout software and hardware. It also highlights the lead these businesses are taking in trying to convince small businesses that they should upgrade their equipment in order to accept the new type of credit cards that big retailers have been gearing up to accept.

“We see ourselves as the IT departments for these growing merchants so we want them to have the latest technology,” said Norm Merritt, ShopKeep’s co-CEO.

Merritt admitted that ShopKeep merchants, of which there are currently about 11,000, haven’t been knocking down his door demanding NFC equipment to accept Apple Pay. But he believes mobile payment methods such as Apple Pay will become more popular in the future and that more small businesses will then want to accept it.

He also said the giveaway, which should help merchants reduce fraud liability from fraudulent card purchases, aligns with the company’s mission of supporting small businesses. Beginning in October 2015, liability for credit card fraud will sit with whichever entity — the issuer or the merchant — is still using the less-secure equipment.

The common belief in industry circles is that small businesses will be slower to upgrade their equipment to accept chip cards than big retail chains because of the equipment’s cost and the relatively low rate of fraud in their stores. Merritt believes that ShopKeep is significantly reducing the friction that is stopping them from upgrading.

ShopKeep is based in New York City and has 170 employees. It charges businesses $49 a month, per register, to use the ShopKeep software to manage transactions, inventory and customer information. Its software is made to run on an iPad, which it sells along with cash drawers, receipt printers and other equipment used by restaurants, bars and specialty retail shops.

ShopKeep businesses can use any credit card processor to accept credit and debit card payments. In theory, a business could use Square as its payment processor and ShopKeep as its software provider. Merritt, however, says this is rare.

Square said last month that it would begin taking preorders for a $29 device that would allow merchants to accept chip cards. The device does not include NFC technology and does not include a keypad like ShopKeep’s that can be used by chip card holders to punch in their PIN to authorize a transaction. These PINs are commonly used in conjunction with chip cards in Europe, but some U.S. banks are allowing their customers to initially provide their signature in place of a PIN.

This article originally appeared on Recode.net.

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