Mobile Payments in 2023: What They Are and How to Use Them
Being a small business owner, you naturally strive to meet customers where they are, whether it is the availability of the right goods or the offer of convenient payment options.
Mobile payment processing is quite simple for a merchant, but requires some prior effort. These include investments in a point-of-sale system that can process contactless payments and transactions with digital wallets.
What is a mobile payment?
Mobile payments are the process of paying for goods and services using a mobile device, such as a smartphone or tablet. This may include payments in stores, online, or through peer-to-peer (P2P) transfers.
Mobile wallet apps or peer-to-peer mobile payment apps can run on these devices. Or they can provide transactions via SMS. Consumers can use mobile payment apps or credit cards to pay on mobile e-commerce sites.
Save time and money with mobile payments
Mobile payments are an inexpensive way to maximize sales by providing your customers with payment flexibility and fast service. To enable mobile payments, you need to find a POS system with functions and equipment that allow you to manage mobile payments.
Since most mobile payment methods use tokenization (when a customer makes a mobile payment, the device creates a one-time credit card number that it sends to the merchant), they also help provide peace of mind.
However, accepting mobile payments does not eliminate the risk of refunds to retailers, so if they are suitable for your business, it is also worth exploring a refund protection policy.
Benefits of your small business accepting mobile payments
They will not keep you waiting, so preparing your business to accept mobile payments should take the first place in the list of your priorities. Cash-only payment systems should become a relic of the past, but you should meet your customers where they are – and they are on the side of mobile payments. Here are some advantages of accepting mobile payments.
Increase sales volume
If you don’t provide potential customers with the option to pay using a mobile phone, you are likely to lose sales. In general, there is a significant reduction in cash payments, but studies have shown that users of mobile payment methods spend twice as much as those who do not use them.
Improves the customer experience
No one likes to stand in line to pay. With mobile payments, you save your customers from having to spend time waiting for other customers to find their credit cards or change, and provide them with a quick and easy service.
It is enough for customers to touch the reader with their phone – there is no need to enter a PIN code, sign receipts or look for coins in their pocket.
It also enables other employees to serve customers anywhere in the store, since they do not need to connect to a POS terminal to process transactions.
Reduces hardware expenses
Some small businesses may not need all the features that POS systems can offer, so investing in systems and POS equipment just for accepting payments may not make sense. Most mobile card systems come with free or inexpensive card readers and transaction fees for mobile payments.
Major benefits of mobile payments
Starting with the advantages, we should mention the most important plus of each new technology that appears on the market. If it is approved by customers, it means that the business gets more sales and conversions. According to surveys, 80% of respondents said that mobile payments are convenient and easy to use.
As for the tangible benefits, they are as follows:
- Higher efficiency. This directly follows from the statistics that we have given above. Mobile payments simply allow you to receive payments instantly – no paperwork, no tracking of payments, no waiting for the receipt to be delivered. In addition, on the client side, the entire payment process available on your site with instant notifications allows users to manage their budget more efficiently.
- Customer loyalty programs. It’s a fairly common practice to offer rewards for mobile payments, such as discounts and points. And this makes your customers more loyal and encourages them to buy more and more from you.
- Increased security. Transferring everything to cyberspace involves many risks. The main one is the compromise of your credit card data when using PoS terminals. Some people even feel uncomfortable because the store staff sees the credit card number when you pay for something. When using mobile payments, the application uses tokenization, which works like EMV chips – the credit card number is encrypted and no one has access to it. And instead of card numbers, the application uses codes.
- More data from your customers. Your marketing team will be eternally grateful to you for this, because knowing the demographic and other data of your customers is extremely important for any business. So you will identify a lot of patterns, how often they spend money and what they buy. And if you apply the bonus programs described above, personalized offers for customers – it always means money.
- The cost of equipment. Phones or tablets are cheaper than credit card processing machines and computers. This makes them extremely profitable for medium and small businesses.
5 types of mobile payments
Mobile payments have five main forms. Although each of them has its own unique features, they all provide almost instant money transfer from one account to another.
Mobile wallet services include applications such as Google Pay, Apple Pay and Samsung Pay. These services run on computers, smartphones, tablets and smart watches and are linked to a customer’s credit card, debit card or bank account.
After a person creates their mobile wallet account, they can use these devices in the same way as a credit card. In the brick and mortar store, they can touch their device on a smartwatch or tablet to a payment terminal equipped with an NFC (near field communication) radio channel. On the internet, they can use their mobile wallet account on the checkout pages of many sellers by selecting the mobile wallet icon (for example, Apple Pay) among the checkout options.
Shopify’s own Shop Pay is an accelerated checkout process that stores customer information to simplify payments on both mobile and desktop computers. This works similarly to a mobile wallet, as it facilitates fast mobile payments when shopping online.
This category, also known as mobile commerce, describes any type of transaction made using a mobile device.
If the buyer makes a purchase through the browser of his mobile device or through the seller’s own application, this qualifies as a mobile payment in e-commerce.
Mobile payments in e-commerce stores can be made using a credit card, mobile wallet, or expedited checkout, such as Shop Pay.
This type of transaction, which is carried out using mobile payment applications such as Zelle, PayPal, Venmo and CashApp, allows people to transfer money to other people through a mobile application or a web page.
Some of these services – primarily PayPal – are widely recognized by small business retailers. This means that you can pay the business owner using PayPal instead of using a credit card.
SMS payments allow people to make payments by sending SMS to a specific phone number. Americans, who mostly own smartphones, rarely make SMS payments. However, SMS payments are widespread and highly trusted in developing countries.
Mobile payments at a point of sale
In a mobile point of sale (pos) scenario, a customer uses their credit card or mobile device to touch and pay at a mobile payment terminal, usually connected to a mobile device such as a tablet.
Customers can also insert a credit card into a chip reader or swipe a mobile POS for an NFC transaction. At this point, the software of your point of sale takes control, transmitting mobile payment data to financial institutions and transferring money to your account.
How Do You Accept a Mobile Payment
Implementation of a mobile payment system
First you need to choose a system that allows you to accept money from customers. Many applications can be integrated with your PoS (Point of Sale) system.
Study the cost and functions of various applications, subscribe to the one that meets all your requirements, and start accepting mobile payments.
Inform your customers
You will not be able to use the new payment system if no one knows about it. To inform your customers, you can add the “Accepted payments” section to your website.
In addition, post information on social networks, send emails, and just hang a sticker with the inscription “Mobile payments” in your store.
Motivate mobile payments with rewards
We have already talked about all the advantages of using mobile payments to get useful data. A custom loyalty program is simply necessary for any business owner, especially for those who use Mobile payments.
Therefore, put your hand to the customer loyalty program to significantly increase your sales. There are three main types that are suitable for this payment model: Loyalty program points, discounts, cashback.
Update your books
Accept mobile payments, but in no case neglect accounting. Many, seeing a quick and simple cash flow, forget about this simple thing and then have to deal with it with the tax service.