What Small Businesses Need to Know About Mobile Payments
A mobile payment is defined as a transfer of funds in return for a good or service, where a mobile phone is involved in the initiation and confirmation of the transaction. Thanks to services like Square and Google Wallet, mobile payments are growing in popularity with merchants across the U.S.
While consumers appear ready to adopt this new method of payment for their purchases, not all technology trends are a smart investment for small businesses. If you’re on the fence about integrating mobile payments with your business, here are three things that you should keep in mind before making your final decision.
Save on Hardware and Fees
Currently the average price of a point of sale (POS) system is in the hundreds, if not thousands of dollars. This means that if you have more than one register in your store, or run multiple stores, you’re spending a bundle on the hardware alone. The advantage of mobile payments is that at most, you’ll need a scanner, assuming the particular mobile payment option utilizes a QR code — a special type of barcode designed specifically for mobile devices.
Options like Square only require a small piece of free hardware that plugs into an iPhone or iPad. Other services like Google Wallet rely on Near Field Communication (NFC) — a wireless technology that allows small pieces of data to be transmitted between two devices in close proximity — which requires a PayPass reader.
Additionally, businesses have the opportunity to save money in terms of credit card processing costs and other fees. Most mobile payment services charge a flat rate per transaction. For example, Square charges 2.75 percent of each transaction regardless of the amount, while the QR code-based service Kuapay charges $.05 for each transaction.
Flexibility Equals Opportunity for More Sales
While not all mobile payment services support on-the-road purchases, Square makes it possible for traveling business owners to accept credit cards. In the past, you could only accept cash or checks; credit card numbers would have to be written down and processed later, or would not be accepted at all – which could lead to the loss of a sale.
Businesses that set up temporary remote locations, or salespeople who travel often will benefit from the mobility of certain mobile payment systems. For example, if you’re attending a conference or have a booth at a farmer’s market, you’ll still be able to complete transactions right from the event. This opens up a world of new offline marketing initiatives. It also adds convenience for your customers, as many shoppers no longer carry cash.
Save the Other Kind of Green
Mobile payments are paperless; there are no checks to process or receipts to print. Most mobile payment systems will send receipts to the customer through electronic notifications or through email. Companies like Apple give customers the choice of a paper or digital receipt. The benefit of going digital is that all purchases are easily trackable for both you and the customer.
Additionally some mobile payment options let companies integrate coupons or loyalty programs into a mobile app. Although not technically mobile payment services, both Groupon and LivingSocial let customers show deal confirmations through a mobile device instead of printing out the paper receipt.
A mobile payment system can create a more efficient check-out process for businesses, and it can introduce new opportunities to increase sales. However, it’s important to weigh the convenience of a mobile payment service against the cost of a traditional merchant account. If your business has frequent, small transactions, it may be worthwhile looking into mobile payment options.