Online Payments: What challenges would a Square-like startup face in Asia?

The answer to this question can vary region-by-region and regulator-by-regulator. To summarise the challenges are not too steep. In some countries it is very easy to roll-out such a service. In some markets, it can be tough, doable but tough.

To list some of the challenges in point-bullet form:

• Financial Regulator does not recognise dongle-based mobile-POS
• Licensing requirements may come in from the financial regulator when it comes to mobile-POS on a smartphone using a cellular network
• The Financial Regulator has no opinion on mobile-POS swipes and as such may allow to you apply for a special permission to operate provisionally, until such time the Financial Regulator deems the risks and other factors governing the roll-out of such a service have been satisfied.
• Existing POS players may not be happy and can complain to either the Financial Regulator and/or Visa/Mastercard to stop you from operating such a service as they may cite that these devices are not EMV certified or Visa/Mastercard certified, etc.
• In some rare cases, type approval for the devices may be required from the FCC equivalent regulator
• You would need to find an acquiring bank to work with and one who would be willing to invest in the software/hardware systems
• In the absence of a direct bank to work with, you can opt to become a master merchant of an existing acquiring bank and take the merchant roll-out, management and risk yourself.
• The risk of MSR transactions
• Dispute resolution policy as far as the regulator is concerned
• Finding the right hardware OEM to supply you with not only the dongles, but SDK for it.
• Having the software, hardware and the Human Resources to put / piece it all together and run it.
• Auditing and Compliance costs of getting such a system approved from an acquiring bank
• Merchantbility of the product itself and business acceptance
• Bringing enough transactions on the network
• Interchange fees
• Merchant Discount Rate as far as the competition is concerned