No More Wallets? The New Way to Pay
No More Wallets? The New Way to Pay
Gone are the days of needing a complex system to process payments for your business. Today, small and large businesses alike are using mobile phone apps to accept credit cards and retain customers. The marketplace for such apps is growing quickly and has some serious financial backing from major corporations. Here's how mobile payment technology may impact your business operations, customers and bottom line in the near future.
It seems like only yesterday cash registers and credit card terminals were essential for businesses to accept payments. Now, practically all a merchant needs to process a customer's credit card is a smartphone. This state-of-the-art mobile technology creates new ways for businesses of all sizes to easily accept credit cards, manage customer databases and engage new clientele.
A recent Forrester survey estimates that 30% of American mobile phone owners are open to trying mobile-payment technology, and market research firm IDC Financial Insights predicts that worldwide mobile purchases will exceed more than $1 trillion by 2017. It makes sense then that businesses are rapidly adopting mobile payment technology.
Mobile Payment Technology for Businesses
There are two sides to this new way of conducting business. For businesses, there are various apps available for the iPhone, iPad and various Android devices that allow merchants to take credit cards wherever they are. The technology behind it is either app-based or driven by near-field communication (NFC). The former requires using an app as the conduit for a purchase; the latter requires having the phone physically close to a reader to complete a purchase.
App-based services require a payment “dongle” and many companies provide these payment solution devices free of charge, including Intuit, PayPal and Bank of America. San Francisco-based Square is only two years old and has quickly become one of the major players in the game.
This system is quite simple to use. The square- or rectangular-shaped payment dongle attaches to the speaker jack of most smartphones, and combined with a service account and cell service, can be used like a traditional credit card machine. The merchant enters the price, swipes the customer's credit card and sends a receipt via email.
Square has around 2 million merchants signed up with its service and recently announced a $25 million partnership with Starbucks. With the new venture, Starbucks will use Square's technology to process payments in more than 7,000 stores. Eventually, the relationship will expand to allow Starbucks customers to pay for beverages via the Square Wallet app (more on that later).
On the NFC side, Google is leading the push with its Google Wallet, which could work with already existing tap-and-go card readers in some businesses. There are also other services such as an app from Groupon for those businesses using its coupon service, and Level Up, which accepts payments through QR codes.
Mobile Payment Technology for Consumers
Mobile payments take customer convenience to a new level. Instead of carrying both a phone and a wallet when going into a store, a smartphone is now all that's needed.
Using an app such as Square Wallet or Google Wallet, a user sets up an account and syncs a credit card to it. When visiting a business that accepts mobile payments, the user pulls up the app on a smartphone and the business simply scans the screen as payment.
The Square Wallet app mentioned previously makes the purchase even easier, since the customer doesn't have to take the smart phone out of his or her pocket. The Square app is activated when entering a participating shop. On the business end, the merchant can see all active customers' photos (i.e. customers who are already in the store) and simply charge the purchase to an account by tapping his or her corresponding photo.
Privacy and Next Steps
Privacy and data security are still frequent concerns when discussing mobile payments. After all, it seems a customer is handing over personal financial information to a merchant's smartphone. But the technology providers reviewed seem to have made a concerted effort to educate and protect both businesses and consumers alike.
For instance, Square, Bank of America and Intuit all state that every transaction is encrypted and credit card data is stored securely on their servers, not on the merchant's phone. PayPal readily offers fraud protection security for both its buyers and sellers. Google Wallet boasts that the service is password protected and can be disabled remotely in the event a smartphone is lost.
If you're ready to start using mobile payments for your business, research the financial companies online and see which one fits your needs best. Then, order a payment dongle (usually free), set up your account online and download the apps to your phone so you can start swiping.
Wallets may soon become passé since automated mobile payments are becoming the norm for some businesses and their customers. But where will it go from here?
Imagine walking into your local Starbucks and grabbing the first available seat. By simply entering the location, your preferred coffee choice is ordered and paid for without ever saying a word. All you have to do is relax in one of those comfy couches and wait for your name to be called. The future truly is now.