This device can turn any mobile phone into a card reader. It just got $25 million funding

Most people in developed countries take the use of credit cards for granted in restaurants or shops. But in India, only the big stores, malls, and ecommerce sites take credit and debit card payments. Less than five percent of the 12-15 million SMEs (small- and medium-sized enterprises) in India are equipped to swipe a card. What they lack is a point of sale (POS) device to make card payments possible. Mumbai-based startup Mswipe fills the gap with a hassle-free POS device which can work with any mobile phone. Yes, even brick phones. Plug it into the phone’s audio jack, launch the application, and you have a card reader ready to swipe.

Mswipe built the product in 2012. Today, the startup, founded by Manish Patel, bagged US$25 million in a series C round of funding. The investors include Falcon Edge Capital, Ola Cabs, and Meru Capital as well as Mswipe’s existing investors Matrix Partners India, Axis Bank, and DSG Consumer Partners.

Manish Patel was running a few wine and beer retail stores in Mumbai when he felt the need for an Mswipe-like device. He wanted a cost-effective POS solution that would let him accept card payments from customers, but found none. So he decided to build it.

Mswipe’s WisepadTM was the first EMV Chip & Pin compliant mobile POS product in India. (EMV is a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them.) WisepadTM was launched in December 2013. The company launched a SmartPOS for Android phones called WiseposTM last month.

“We believe in serving the smallest of merchants,” Patel, founder and managing director of Mswipe, says. “Mswipe aims to provide seamless mobile POS solutions to one million merchants across 400 Indian cities and towns.”

One of Mswipe’s early clients was a small salon in Mumbai. Most of its clients ordered for services at home and wouldn’t have the cash at hand to pay. The salon staff wasted a lot of time to collect payments due. Mswipe solved that problem for them. Now, over 25,000 small merchants in India use Mswipe.

Mswipe works with several banks like Axis Bank, Corporation Bank, and SVC Bank to provide the POS solution. It is also present in the Middle East, the US, and SE Asia through partnerships.

Bangalore-based Ezetap is a close competitor, aiming to bring mainstream financial services into businesses in small towns and villages of India. Founded in 2011, it’s backed by PayPal founder Peter Thiel, credit card giant American Express, and Mayfield Fund.

India might be taking big leaps into ecommerce but the majority of the country’s one billion plus people still do a lot of shopping at corner stores for whom the spread of POS will be a big help. That coupled with the growing mobile phone base gives startups like Mswipe and Ezetap a huge market.