The Merchants Guide to Mobile Payments
Mobile technology has transformed how we conduct business, and customers pay for goods and services. In today’s world, smartphones and tablets are powerful tools that streamline operations and improve customer experience.
This is particularly true for small and medium merchants, where mobile card readers initially gained popularity. Mobile businesses such as dog groomers, farmers market vendors, handy home service providers, and others were the first to see the potential of mobile payment processing.
Over time, as other solutions developed, mobile chip readers were adopted by small businesses with physical locations that didn’t want or couldn’t support a full-featured POS system. And, as consumers demand more convenient ways to shop, mobile readers have found their way into stores, allowing staff to meet them where they are and accept their payments on the spot.
The numbers continue to grow. U.S. mobile POS payment transaction value is expected to hit $0.98 trillion in 2024, with transaction value growing 12.77% annually (CAGR 2024-2028), reaching $1.57 trillion by 2027. With users estimated to grow to 219.9 million by 2027, merchants not accepting mobile POS payments will be at a competitive disadvantage.
Mobile Wallets vs. Mobile Payments
Before we go further, let’s keep it simple. Sometimes, there can be confusion between mobile wallets and mobile payments.
Mobile payments equal mobile point of sale
Mobile payment solutions are the services processors provide that let merchants accept card payments from a smart device. This includes:
Hardware: a mobile card reader or near-field communication (NFC) reader that connects via Bluetooth to a smart device without being plugged into the device.
Mobile payment app: an iOS or Android app that connects all mobile solutions.
Software: within the app, a suite of additional tools can simplify payment acceptance and reporting.
A mobile credit card terminal can do as much as a traditional POS with the right technology.
BPOS Mobile Credit Card Reader
Mobile wallets equal stored cards.
Mobile or digital wallets connect your customers’ credit and debit cards, allowing payments without the physical card. Card information is encrypted in the mobile wallet, and the merchant needs a near-field communications (NFC) reader to take payments. If you can accept contactless payments, you can accept mobile wallet payments.
Apple, Samsung, etc. wallets are connected with the card brands (Visa, Mastercard, Discover, etc.) with payment processed and charges assessed at card present rates as if processed by a traditional POS.
Mobile Payment Processing Explained
Mobile payment processing allows you to take customer payments using physical cards, smartphones, or tablets. Let’s explore the options:
Mobile credit card readers: These small devices connect to your smartphone or tablet using Bluetooth, allowing you to swipe or dip (insert) credit cards for payment.
Mobile wallets: The most popular are Apple Pay, Google Pay, and Samsung Pay. Wallets securely store your customers’ payment information, allowing them to make contactless payments using their phones.
Mobile eCommerce: Customers can pay using their phones with mobile apps or web browsers on your online store.
Peer-to-peer (P2P) transactions: Apps like Venmo, PayPal, and Cash App allow payment to friends and pop-up store vendors. Merchants can use these applications instead of credit and debit card transactions; however, consumer and merchant protection may differ.
Why Mobile Payments Are a Smart Choice for Your Business
In addition to growing consumer acceptance and use, there are other reasons why mobile payment may make sense for your business:
- Convenience: Quick and easy payments without cards or cash.
- Increased Sales: Offering mobile payments can drive impulse purchases and increase sales.
- Improved Customer Experience: Simple, convenient checkout improves customer satisfaction and repeat sales.
- Greater Security: The tokenization of customer information makes EMV cards and mobile payments more secure than traditional cards.
- Versatility: Mobile payment solutions can be used anywhere with a wireless signal or Wi-Fi connection.
What to Look for in a Mobile Payment Processor
When choosing a mobile payment processor, consider the following factors:
- Features: Does the payment processor solution have the features you need, such as the ability to accept different types of payments?
- Customizable: Is the solution customizable to how you do business or a one-size-fits-all solution?
- Account: Will you have your merchant account or a sub-account? Well-known processes speed up the signup process using sub-accounts, which have distinct disadvantages over a merchant account you own and can control.
- Pricing: Fees and transaction costs vary widely; compare apples to apples. Watch out for junk and added fees.
- Fee-Based Options: Does the processor offer to offset processing costs with the customer paying the processing cost options?
- Reporting: Can you track individual devices or locations and control options at the individual employee level?
- Security: Is the processor PCI DSS Level 1 compliant? What other protections do they provide to protect your customer’s data?
- Customer Support: Is the support U.S. based, reliable, and available via phone, chat, and email?
Getting Started with Mobile Payments
Let’s walk step by step through how to add mobile payments to your business:
Identify your needs. Think about the payment types you want to accept. Do you need to accept both EMV and NFC payments? How will these mesh with your current payment solutions and channels? Will the customer experience be the same across all channels? Where and how will you accept payments? Do you need next day funding of payments?
We recommend adding text and email payment links to your consideration list. Then, consider how many devices plus additional software or apps you may need and determine your expected sales volume.
Choose a payment processor. It could be your current provider or someone new. Do your homework, compare the new processor solution to your list of needs, and research the costs involved. Some processors offer free or reduced-cost equipment for new clients. However, like anything free, be cautious and understand what their free means.
Please note that not all mobile payment options cost the same. If you provide bids, Text2pay payments are a needed feature when sending quotes. However, Text2pay can include a per-message charge and a monthly fee for the service, whereas payment links sent via email may not.
Set up an account. Consider whether you want the flexibility and control of your merchant account or a sub-account will work. Many well-known processors offer a simple online signup process but often don’t make it clear you are signing up for a sub-account to their merchant account, which can cost more per transaction and will complicate leaving that processor in the future. Another consideration is how the transactions will get into your accounting system. Are the payments updated in real-time via integration or manual entry?
Ready! Set! Once your account is set up, will any processes or procedures need to be changed or created when you start using your new mobile solution? How will you account for device security, use, and maintenance? Also, you must train your staff on the equipment, software, and procedures before accepting payments.
Start Accepting Payments.
Monitor and adjust. Keep track of your transactions and adjust as needed.
The Future of Mobile Payments
The global mobile payment market is expected to grow at a compound annual growth rate (CAGR) of 36.2% from 2023 to 2030, reaching a value of $587.52 billion by 2030. By offering mobile payment options, you can ensure your business is prepared to meet your customers’ needs and stay ahead of the competition.
Ready to Get Started?
Having the right merchant services provider as a partner is essential to maximizing the benefits of mobile payment processing. Your vendor should equip you with the best software, technology, and support to facilitate cost-effective payment processing; IntelliPay checks all those boxes and more. Contact us at 855-872-6632, option 3, or click here to schedule a no-obligation consultation.
FAQs about Mobile Payment Processing
Q: What is mobile payment processing?
Mobile payment processing includes transactions made using a mobile wallet, processed by a mobile credit card reader, and transactions processed from in-app purchases or transfers using a mobile phone.
Q: How do mobile payments and mobile wallets differ?
Mobile payments are the service that lets merchants accept card payments from a smart device. This includes a card swiper or near-field communication (NFC) reader and a mobile payment app. In addition, mobile wallets connect consumers credit and debit cards, enabling payments without the card present. Merchants need an NFC reader to accept these types of payments.
Q: How do I implement mobile processing payments?
To implement mobile processing payments, start by identifying your needs, such as the kinds of transactions you’ll be accepting, additional software services you need, how quickly you want payments to reach your bank account, and expected sales volume. Then, choose a suitable payment processor. Set up an account with your chosen processor, offer diversified payment options to your customers, and constantly review and adapt your approach based on analysis of your transactions.
Q: What is a mobile wallet?
Mobile wallets connect with customers’ credit and debit cards and allow consumers to pay without a card present. Information is encrypted in the mobile wallet, and merchants need an NFC reader to accept payment.
Q: What are the types of mobile payments?
Payments are made through mobile credit card readers, wallets, eCommerce, and peer-to-peer (P2P) services like Venmo and PayPal.
Q: What is a mobile point of sale (mPOS)?
A mobile point of sale (mPOS) is a smartphone, tablet, or wireless device functioning like a cash register or point of sale (POS) terminal. Using mPOS businesses to accept payments anywhere with a cell signal or internet connection.
