Small businesses need any advantage they can get, especially in today’s competitive market. Technology is providing an advantage with an emerging technology known as mobile payments. The concept is to allow small businesses to use smartphones to accept and process payments. Smartphones can’t read the magnetic stripe on a credit card, but a third party can verify the information that is entered and confirm that a payment went through. This gives small businesses a faster way to process payments and greater flexibility when it comes to doing business.
Here’s a look at how smartphone payment systems are giving small businesses a much-needed boost:
Point-of-sale terminals that read and process credit cards can be a major investment for a small business. Cash registers, traditional credit card scanners, and setting up an online payment method can cost around $3,000 – and that doesn’t include multiple registers.
These days, not accepting credit cards isn’t a luxury most businesses of any size can afford. With more people using smartphones to access their personal accounts, mobile payment devices are presenting an affordable solution for small businesses looking to offer convenient payment options to customers.
The technology behind mobile payments is becoming affordable enough that small businesses can realistically afford to jump on board. Since the app needed run such a system is free and the accompanying card reading device is usually free too, the only real expense involved is the fee that the third party provider charges for processing each credit card transaction. It’s usually a percentage of each transaction or a set fee per month.
The technology behind mobile payments really started with larger companies and is now becoming a viable option for smaller businesses, as this MerchantOS review attests to. In terms of marketing, smartphone payment devices present attractive options for small businesses that do a lot of offsite business requiring payment. AT&T already has agreements in place with developers of such systems, so it’s definitely a technology that is set to become a major asset to businesses.
On a global level, mobile transactions are expected to exceed $170 billion for 2012 alone. This is a 62 percent jump over 2011 figures. Clearly, customers are open to the idea.
As with most emerging technologies, there are a lot of companies out there looking for a slice of the market. This is good news for small businesses. Most of the major services offering smartphone payment options offer the app and required card reader device free of charge. These companies make their money by charging a small fee for each transaction or a monthly flat rate.
Most services work with Apple and Android devices. The difference is really in the pricing structures. Some services offer a choice of either a flat rate or a fee per transaction, while other services make the decision for you. Fortunately, most services don’t require a contract or long-term commitment.
There is no one “best” service. It depends on how much offsite business occurs and how often mobile payments are made. The fact that such systems are more affordable and easy to set up means that small businesses really don’t have anything to lose by giving it a try.
Aside from doing offsite business, mobile payment devices can be used in other situations to help speed up the transaction process. If, for example, a business has a line at their register that stretches outside or almost to the door, an employee can stand in line with a smartphone and an attached card reader to process payments. Even a brick-and-mortar business that occasionally makes deliveries or service calls can benefit by being able to process a customer’s payment instantly. This provides peace of mind for both the customer and the business owner.
Just be sure that you have considered what type of merchant account is best for your business.
According to survey by the National Retail Federation, about six percent of businesses surveyed already have a mobile payment system in place. The trend is likely to continue as consumers become more wireless in terms of how they pay for services.
Security is a valid concern, but most major companies offering mobile payment devices are making serious efforts to maintain security while processing payments. Like any developing technology, improvements will be made along the way.
As it stands right now, it’s still worth at least considering the advantages that mobile payments can bring to a small business.
About the Author: Amy Nielson is a freelance blogger writing on behalf of Merchant Maverick. You can follow her on Twitter @NielsonAmy.