By now, you’ve all heard that commercial that asks “what’s in your wallet” and know that the answer is not money. But increasingly, consumers aren’t paying with anything in their wallet at all; they are paying with their smartphones, and small businesses should be getting ready to let them do so. Mobile payments made through mobile phones are viewed as more secure than credit cards and can help small businesses to gather much more information on the customers they serve.
If you haven’t used or experienced mobile payments, they are financial transactions that happen through a smartphone. Customers access them by installing a smartphone app, and the money used to facilitate these mobile payments is stored in digital wallets, which may be provided by a bank, private non-bank company (like PayPal) or other financial institution. All in all, it’s an easy way to move money, which is why usage of mobile payments has been growing so rapidly. According to one recent report, mobile payment volume is expected to reach $92 billion by 2019.
Participating in this as a small business is easier than you might expect. If you upgraded your point-of-sale (POS) systems to handle so-called EMV chip cards, your POS terminal should also be able to accept many kinds of digital wallets. (If you missed the memo about EMV chip cards, in October 2015, U.S. financial institutions began requiring all merchants to accept chip cards because they are more resistant to fraud. If your business can’t accept chip cards, you could be fully liable for any fraudulent payments made to your business.) Mobile payments are also faster to accept than credit or debit cards. Your customer simply waves his or her wallet over your payment terminal and the transaction is processed -- no need to print receipts or wait for them to be signed.
If you’re accustomed to handing an invoice to a customer and then waiting 30, 60 or even 90 days to be paid, know this: when you can accept mobile payments, you, and any of your employees, can be paid immediately. That should do wonders for your cash flow. You can get set up to accept a mobile payment through your company's smartphone or tablet, and it will be easier and less expensive than a POS system.
The advantages of mobile payments don’t stop there. When you are able to recognize your customers by their mobile phone identities, you can send them special mobile coupons and mobile promotions, or enroll them in a mobile loyalty program. Some mobile payment companies will provide you with reports on the buying patterns of customers like yours, which can help you to further sharpen your merchandising. Finally, your marketing can go directly where your customers are—on their phones.
So, take a minute to pay attention to the marketing mailers and emails that you are getting from mobile payments companies. Just as with credit cards, you’ll want to screen their offers for setup fees, per transaction fees and minimum transaction fees. Then act -- it’s time to go mobile.
Photo credit: Shutterstock / Denys Prykhodov
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