No wallet? No problem! Armed with a smart phone or tablet, consumers can easily receive payments and make payments. Mobiles are changing the way we make everyday payments. According to Barclays Capital, mobile transaction values hit $5.3 billion in 2011, an increase of 83 percent from 2010. This staggering growth of mobile technology has revolutionized the way we do business. Gartner predicts that usage of mobile payment methods will increase globally by 617 percent to 448 million by 2016. In the U.S. alone, mobile payment methods are expected to reach $90 billion by the year 2017.
Conducting business using the traditional credit card method will soon become passé with mobile payments gradually taking center stage. But first …
What is payment processing?
Put simply, it’s the transaction that takes place when you shop for something or eat at a restaurant and pay using your credit card. This mode of payment has become hugely successful and a favored option for a majority of customers, and for good reason. Using a credit card means you don’t need to hop into your car and ride to the ATM to withdraw cash every now and then. Carrying out a cashless transaction is safer, quicker, and much more convenient.
Mobile Credit Card Payment Processing
Credit card payment processing has gone a step further thanks to the revolution that swept mobile technology in the last few years. Credit card payment processing can now be done using a mobile device! But how does it work? Here are a couple of ways:
- The consumer downloads a mobile wallet app, stores all his/her credit card and debit card details in it and uses it for making online payments or for payments at retail stores.
- Some finance companies providing revolving credit also providemobile apps for users. All you have to do is scan QR codes and get instant loan approvals enabling them to make immediate payments for purchases using financing options.
- The merchant downloads the app offered by the mobile payment processing company on his smartphone and buys a card reader that can be attached to the phone’s jack. To make a transaction, the customer or the business owner swipes the credit card through the card reader which has the ability to read and interpret the magnetic stripe and transmit the credit card information to the app for further processing.
- Mobile payments can also be carried out using NFC (Near Field Communication) where mobile devices, using NFC technology communicate with the point of sale terminal which are also NFC-enabled. There’s no physical contact between the mobile device and the point of sale terminal, but both need to be within 4 or 5 inches of each other so information can be transmitted using radio frequency identification.
Effect of Mobile Technology on Payment Processing
Credit card payments are a vital aspect of many businesses. But using mobile technology to help this transaction go through is slowly gaining ground. This technology can have a profound impact on the way small enterprises carry out their business. Here’s how:
- Small businesses which don’t have a very large infrastructure can find it lucrative to use mobile methods of credit card payments. You don’t have to be tech-savvy to start this kind of payment method, nor does it require a massive setup. For example, cash-only services such as those of home repair contractors, massage therapists, and deliverymen can begin accepting payments using this method, substantially increasing their revenue.
- The restaurant chain Chili’s is rolling out its new mobile ordering and payment method. Customers can now use tablets placed at every table to order food and beverages and pay the check and leave whenever they’re done. This eliminates the need to wait to place the order or for the check to arrive, speeding up things considerably. It reduces wait time and allows the restaurant to accommodate more customers in the same time frame.
- Mobile payment isn’t just for shop owners. It can come in handy for those businesses thatneed to collect payments from customers on-site such as courier delivery services, cab drivers, or even the police, who can collect fines from drivers on the go!
- Businesses can also seamlessly combine incentive and reward programs with such a transaction, which obliterates the need for customers to carry key tags or punch cards each time they shop. All the information such as reward points collected so far can be stored in the mobile app or the software that’s used to make the payment, and can be retrieved every time a transaction is carried out.
As a merchant, if you plan to outfit your business with mobile payment processing, a good idea would be to review the mobile payment service providers. Selecting a vendor that’s best for your business is of utmost importance. Evaluate the vendor by learning as much as you can about the kind of services they provide, read merchant reviews, and talk to their customer service to get an idea of how they treat potential customers. A reliable way to rate such providers would be to visit review sites to read reviews of merchant account providers.
It’s only a matter of time before businesses turn to mobile payment processing methods once they realize the full potential of this technology. ComScore carried out a survey which revealed that 65% of Smartphone users in the United States perform shopping activities using their mobile devices. Customers will be a happy lot when they don’t need to shop around using cash or even credit cards, and can make a payment by just flashing their mobile devices in a transaction that is safe and secure. And keeping your customers happy is often the smartest way to do business!