Accepting Mobile Payments

After years of predictions that mobile payments would transform how we do business and shop, the long-hyped technology is achieving mainstream acceptance and providing opportunities for small businesses to increase their sales and improve their cash flow.

Whether it’s accepting payments via a smartphone app, swiping payment cards with a mobile device reader, or ringing up sales on a web-connected tablet, mobile technologies are gaining momentum among consumers and business owners.

Digital Wallets

Digital wallet apps that depend on near field communications (NFC) chips or optical scanners are the fastest-growing segment of the mobile payment market.

Digital wallets rely on consumers storing payment or account data on their smartphones, and completing transactions by holding the devices near readers installed at a merchant’s point-of-sale (POS) terminal or an entry card reader. Payment data is transmitted wirelessly between the device and the merchant’s terminal.

Because payment data is encrypted and transmitted over cellular networks, digital wallet transactions are typically faster and more secure than swiping a magnetic strip credit or debit card.

Digital wallets can be used to store different types of data, including payment details, loyalty cards, event tickets, boarding or building-entry passes, and more. Basically, any type of data can be encoded into a readable data format is a good candidate for digital wallets.

Digital wallet capabilities are installed in the Android and iOS operating systems, which is prompting broader consumer acceptance as digital transactions are accepted in a wider variety of locations.

Payment Card Swipe

Another mobile payment technology with wide consumer acceptance is swiping a traditional payment card with a reader plugged into a smartphone or tablet. This method allows small businesses to accept and process payments wherever they have wireless service.

Mobile payments are especially convenient for businesses that perform services at customer locations, such as repair shops, plumbers, contractors, delivery services and similar companies.

Instead of dealing with a bulky card reader and having to enter payment card information manually after the service is completed, your field tech or customer service rep can swipe your customer’s payment card data immediately after service is completed. The customer then “signs” with his or her finger on the device, and they receive an emailed receipt.

Along with the convenience of accepting the payment immediately after the service, using a payment card swipe service gives you faster access to the actual payment because most processors deposit funds the next day. There’s no need to wait for a batch process before funds are available.

Although mobile swipe services were designed to accept payments remotely, they can also be beneficial to very small businesses, including sole proprietors, who need to get started accepting payment cards but do not have the volume to justify establishing a merchant account.

Payment processors usually assess a fee for each transaction. For many small businesses, this is likely to be less expensive than traditional payment card transactions. Businesses with a consistent volume of payment card transactions may wish to upgrade to a plan with a monthly service charge and lower fees for individual transactions.

The latest generation of card readers also offer the ability to except chip-enabled cards, offering an additional degree of security for each transaction.

Popular service choices include Square, PayPal Here, Intuit GoPayment and others.

Tablet POS Platforms

Mobile technologies are also making considerable inroads in replacing traditional POS terminals, especially among smaller retailers, restaurants, cafés and similar establishments.

A tablet-based system allows employees to enter transaction data on the touchscreen and to swipe a payment card. As with the mobile apps, the customer has the choice of having an emailed receipt, or the tablet may be connected to a small printer.

Most POS systems include barcode scanning and inventory management capabilities that help you improve the efficiency of your transactions as well as related administrative tasks such as reordering inventory.

Many systems also include industry-specific software that accommodates the differing needs of businesses, such as a retailer versus a nightclub. Depending on your needs, some may allow you to split tickets between patrons, track employee timesheets, calculate your tax obligations and other back-office functions.

Some platforms also include customer loyalty or email marketing programs that help you stay in touch with customers between transactions and potentially increase engagement and sales.

While the ability to accept payment cards is the primary motivation to start using a mobile payment service, most platforms also allow you to generate detailed reports about your sales.

Transaction Security

All of the mobile payment systems listed above has a number of security features, starting with compliance with Payment Card Industry (PCI) security standards and the automatic encryption of customer and payment data.

As mobile payments become more common, their novelty value is fading and consumers are more accustomed to seeing companies they are patronizing use the technology.