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.
What is Fortumo
Fortumo is a that enables users to make purchases and payments using their mobile devices. It was founded in Estonia in 2007 and has since grown to become a global company, serving customers in over 100 countries.
Fortumo specializes in providing carrier billing services, which allows users to make payments by charging them directly to their mobile phone bills or deducting the amount from their prepaid mobile balance. This payment method is particularly convenient for users who do not have access to traditional banking services or credit cards.
The company partners with mobile operators around the world to offer carrier billing as a payment option for various digital goods and services, including mobile apps, in-app purchases, online gaming, digital content subscriptions, and more.
By leveraging the existing mobile network infrastructure, Fortumo simplifies the payment process and expands access to digital services for users.
Fortumo’s platform provides merchants and service providers with the necessary tools and APIs to integrate carrier billing into their applications and services. It offers a secure and seamless payment experience, allowing users to complete transactions with just a few clicks or taps on their mobile devices.
Overall, Fortumo plays a significant role in the mobile payments industry, facilitating convenient and accessible payment options for both users and businesses around the world.
The history of Fortumo
Fortumo was founded in 2007 by Rain Rannu, Martin Koppel, and Veljo Otsason in Tartu, Estonia. The company initially started as an SMS gateway provider, offering messaging services and solutions to businesses. However, it soon recognized the growing potential of mobile payments and shifted its focus to become a mobile payment service provider.
In the early years, Fortumo focused primarily on providing premium SMS services, allowing users to make micropayments by sending text messages to specific numbers. This service was widely used for purchasing digital content, such as ringtones, wallpapers, and games.
As the mobile industry evolved, Fortumo expanded its services and started offering direct carrier billing, which allowed users to make payments by charging them to their mobile phone bills. This payment method gained popularity due to its simplicity and convenience, especially in markets where credit card penetration was low.
Fortumo quickly established partnerships with mobile operators worldwide, enabling its carrier billing service to reach a broad audience. It expanded its coverage to over 100 countries, including emerging markets in Asia, Africa, and Latin America.
In 2012, Fortumo received a significant investment from Intel Capital, the investment arm of Intel Corporation. This funding helped the company further expand its operations and strengthen its position in the mobile payments industry.
Over the years, Fortumo continued to innovate and diversify its offerings. It introduced new payment channels, such as in-app payments, which enabled users to make purchases directly within mobile applications.
The company also developed partnerships with various digital merchants and service providers, including app stores, gaming companies, streaming platforms, and digital content providers.
In 2017, Fortumo launched Fortumo Insight, a data analytics and business intelligence platform that provided merchants with valuable insights into user behavior, transaction data, and market trends. This tool helped businesses optimize their mobile payment strategies and improve monetization.
Fortumo has also expanded its services beyond mobile payments. It introduced direct carrier connections for mobile messaging, allowing businesses to send SMS messages directly through mobile operator networks.
Additionally, Fortumo offers mobile identity verification services, enabling secure and seamless user authentication through mobile phone numbers.
How Fortumo works
Fortumo operates as a mobile payment service provider, offering various payment solutions to businesses and users. Here’s a general overview of how Fortumo works:
- Integration: Merchants integrate Fortumo’s payment platform into their applications, websites, or digital services. Fortumo provides APIs, SDKs, and documentation to facilitate seamless integration.
- User Initiation: When a user wants to make a payment, they choose the Fortumo payment option provided by the merchant. This could be in the form of a “Pay with Fortumo” button or a specific payment flow integrated into the application.
- Payment Flow: When the user initiates the payment, Fortumo’s platform handles the transaction process. The specific payment flow may vary depending on the integration and the payment method chosen (e.g., carrier billing, in-app payments).
- User Verification: For carrier billing, Fortumo verifies the user’s mobile phone number to ensure it is valid and matches the carrier network. This verification step is crucial for security and preventing fraudulent activities.
- Payment Authorization: Fortumo sends a payment request to the user’s mobile network operator, requesting authorization for the payment. The operator checks the user’s account balance or verifies if they meet the necessary criteria for the payment.
- Payment Confirmation: Once the mobile operator approves the payment, Fortumo receives a confirmation, indicating that the payment has been authorized. Fortumo then notifies the merchant and user about the successful transaction.
- Transaction Settlement: Fortumo handles the financial aspects of the transaction, including settling the payment with the mobile operator and processing the payment to the merchant’s account. Settlement periods may vary depending on the agreements between Fortumo, mobile operators, and merchants.
- Reporting and Analytics: Fortumo provides merchants with detailed transaction reports and analytics through its Fortumo Insight platform. This data helps merchants understand user behavior, optimize their payment strategies, and improve monetization.
- Customer Support: Fortumo offers customer support services to both merchants and end-users, assisting with any payment-related inquiries, issues, or disputes.
It’s important to note that the specific payment process and user experience may vary based on the payment method, integration, and country-specific regulations. Fortumo’s goal is to provide a secure, seamless, and convenient payment experience for both merchants and users, leveraging carrier billing and other payment channels to facilitate transactions.
Can Fortumo be trusted
Fortumo has been operating as a mobile payment service provider for over a decade and has established partnerships with numerous mobile operators and merchants globally. It is recognized as a reputable company in the mobile payments industry. However, it’s always essential to consider certain factors when determining trustworthiness:
- Reputation: Fortumo has a track record of working with reputable mobile operators and merchants worldwide. Its long-standing presence in the industry and extensive partnerships indicate a level of trust that has been built over time.
- Security Measures: Fortumo takes security seriously and implements measures to protect user data and transactions. This includes encryption protocols, secure communication channels, and compliance with industry standards and regulations.
- Compliance: Fortumo adheres to legal and regulatory requirements in the countries where it operates. Compliance with regulations such as data protection and anti-money laundering demonstrates a commitment to maintaining high standards.
- Customer Support: Fortumo provides customer support services to both merchants and end-users. A responsive and reliable support system is an important aspect of trust, as it ensures that any issues or concerns can be addressed promptly.
- Industry Recognition: Fortumo has received recognition and awards in the mobile payments industry, which further reinforces its credibility and reputation.
While Fortumo is generally regarded as a trustworthy company, it is always recommended to conduct your own research and due diligence before engaging in any financial transactions. Consider factors such as the specific terms and conditions, user reviews, and the reputation of the merchants you interact with via the Fortumo platform.
Does Fortumo charge a fee
Yes, Fortumo charges fees for its mobile payment services. The specific fee structure may vary depending on factors such as the payment method, transaction volume, country, and specific agreements with mobile operators and merchants.
Fortumo typically operates on a revenue-sharing model, where a percentage of the transaction value is retained as a fee by Fortumo. The remaining amount is then distributed between the mobile operator and the merchant. The exact percentage can vary and is typically agreed upon between Fortumo, mobile operators, and merchants.
The fees charged by Fortumo cover various aspects of the payment processing, including technical infrastructure, transaction settlement, security measures, customer support, and other operational costs associated with providing mobile payment services.
It’s important for merchants and businesses to carefully review and understand the fee structure provided by Fortumo before integrating their services.
Additionally, the fees may differ based on the specific payment methods utilized, such as carrier billing, in-app payments, or other payment channels offered by Fortumo.