Business

The Benefits and Risks of Mobile Payments For Your Small Business

Does your small business currently accept mobile payments? If your answer is ‘no,’ your company is definitely losing out on a growing and profitable source of income. Despite a large percentage of small businesses admitting to having cash flow issues, many are falling behind on using smartphone technology as a means of accepting customer payments.

Understandably, new technologies can be intimidating… until you learn the basics. Therefore, let’s take a look at what mobile payments are exactly. Then we’ll explore the benefits and risks of this type of payment for the small business owner. 

What are mobile payments?

Mobile payments allow customers to pay for their purchases simply by using their smartphones. Some mobile payment types have really caught on primarily because they are both economical and relatively simple to implement. Two common types including the following:

Mobile smartphone wallets (like Apple Pay, Samsung Pay, et al)

A mobile wallet is either an app installed on a smartphone, or it is a built-in feature to the phone itself. Mobile wallets allow consumers to store their payment information on their mobile device (e.g., debit card, credit card, etc.).

To make a payment, typically contactless Near Field Communication (NFC) technology may be used. The consumer waves an NFC-enabled mobile device over a store’s NFC reader to trigger the transfer of information and payment authorization.

SMS-based transactional payments

With a Short Messaging Service (SMS) payment system, consumers send a text message to a mobile payment provider to pay for a product or service. The mobile provider clears the transaction and adds the cost of the purchase to the monthly phone bill or deducts the amount from a pre-paid balance.

Mobile payments risks

As with any new technology, business owners need to review potential risks before determining if a solution is right for them. 

Security

Business owners and consumers have concerns with payment security. Smart business owners will minimize risks of a mobile payment system by seeking out a payment processing company that offers the highest forms of security measures against fraud and cybercrime.   

Technology considerations 

Mobile payment systems require a business to invest in hardware (terminals, etc.) that supports NFC. These systems require updates and a strong Internet connection. As with any technology, these systems including their hardware can become outdated.

Mobile payment systems may not be compatible with all mobile devices. In other words, no matter the payment system you implement, a segment of customers will be unable to use your mobile payment system. Your mobile payment processor should review all of these factors with you. 

Consumer payment trends

While a large segment of consumers is eager to make use of mobile payments, many other customers remain satisfied with using cash or debit/credit cards. Using mobile payments as a sole payment option risks losing revenues from this smaller but stubborn customer segment.

Mobile payment benefits

More and more small businesses are implementing mobile payments because of the ease of acceptance as well as the convenience both for themselves and for their customers.  

Convenience

Convenience is a primary driver for how consumers choose to buy, and mobile payments make buying extremely easy. Customers can enjoy contactless payments using their phones, never having to pull out cash or credit cards.

 Reduced expenses

Mobile payment systems reduce the need for businesses to invest in expensive and space-consuming equipment. Since receipts can be sent via email or text message, these systems also eliminate or reduce the need to purchase, store, and load paper and ink.

 Mobile payments are fast

With a mobile payment, customers wave their mobile device and authenticate (e.g. through facial recognition), and boom the transaction is complete. No need to count cash or wait for a chip card transaction. This faster transaction is a more user friendly experience, and results in cost savings for the business.

Set Up a Mobile Payment System

Positioning your business as an early adopter of this newer technology will demonstrate that you are on the cutting edge of new trends. Find a mobile payment processing company you can trust. Then discuss solutions to learn how you can begin taking mobile payments immediately.

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