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Guide To Mobile Payments

Sep 25, 2018 | Articles

Mobile payment technology is a broad term that encompasses many different ways to send and receive money through smart devices (i.e., phones and tablets).

When the iPhone was introduced in 2007, mobile payments were still a fringe technology with very low adoption. Over the years, they’ve increasingly become the preferred payment option for a growing number of consumers and businesses alike.

It’s not difficult to see why.

In 2011, only 35 percent of Americans owned smartphones. Now, that number stands at 77 percent. Among millennials in particular, smartphone adoption approaches 94 percent.

This growth isn’t limited to ownership. Smartphone usage is also on the rise. In fact, mobile browsing officially surpassed desktop browsing for the first time in 2016. According to some estimates, payments made through mobile devices could eventually exceed half a trillion dollars in annual sales by 2020.

As a merchant, this means you must be set up for mobile payments if you want to continue growing your business. But what exactly are mobile payments? And how do they work?

Mobile Payments Defined

There are a number of ways to send and receive money through mobile devices. Three of the most popular payment options include:

  • In-browser purchases
  • Virtual wallets
  • Mobile readers

Let’s take a closer look.

1. Mobile payments via in-browser shopping carts

With this method, customers essentially use their mobile devices to shop online — just as they would from a desktop computer. The only difference is the size of the screen.

In-browser shopping can also be configured with individual apps across Android and iOS devices.

The benefit of this mobile payment option is there’s no learning curve. Most customers are already familiar with how e-commerce works. As a merchant, however, your site must be set up for mobile users — complete with intuitive navigation and responsive design.

2. Mobile payments via virtual wallet

Virtual wallets allow users to connect credit card accounts to their mobile devices. When they’re in a brick-and-mortar store, these shoppers can use their smartphones to authorize payments.

Apple Pay and Google Wallet are arguably two of the most popular virtual wallets. Both leverage the same contactless payment technology. Instead of swiping a traditional credit card, customers can hold their smartphones to a terminal to initiate transactions

As a merchant, all you need is a near field communication (NFC) reader that is capable of wirelessly connecting with your customers’ smartphones.

If you’ve recently upgraded your older credit card readers to the newer EMV standard, there’s a good chance you’re already able to accept payments made through virtual wallets (as most modern EMV credit card terminals come equipped with NFC capabilities).

Better still, you don’t need to configure your terminal to each type of virtual wallet. NFC readers are platform-agnostic. So, if your payment environment works with Apple Pay, it also works with all other branded virtual wallets — from Google to Walmart to Uber.

Once properly set up for virtual wallets, you’ll likely benefit from faster and shorter checkout lines — this means having the ability to generate more sales per hour.

3. Mobile payments via portable credit card readers

Most point-of-sale (POS) terminals are standalone machines with dedicated credit card slots, but it’s possible to transform your existing mobile devices into portable POS terminals. All you need is a detachable credit card reader that fits into your phone’s audio jack.

Although portable and lightweight, mobile credit card readers offer the same functionality of their stationary POS counterparts, meaning:

  • Customers swipe their credit cards through the reader.
  • They sign their name on the screen or enter a PIN.
  • Receipts can be printed or sent electronically by email.

When using mobile readers, your employees are no longer tied to the checkout counter. Instead, they can roam the store and process credit card sales on the fly. This means shorter and faster checkout lines, and more potential sales per hour.

A major benefit of mobile credit card readers is you can generate sales at off-site events such as trade shows, conferences and festivals. As long as you have an Internet connection, you’re in business.

The best part is, very little setup is required. If you currently accept credit cards, you already have a merchant account. You also probably have a number of smart devices used to help run your business.

The only missing component is the detachable credit card reader; fortunately, these are relatively inexpensive.

Which Mobile Payment Technology Is Right for Your Business?

After reading this mobile payments guide, you should have a pretty good idea of how each of these technologies work. The question is, which mobile payment technology is right for your business?

It’s not really an either/or decision. You should add as many payment options as possible, especially those that allow you to capitalize on the growing popularity of mobile devices.

If you’re still undecided, however, follow these rules of thumb to get you up and running as quickly as possible:

  • For brick-and-mortar retailers, mobile credit card readers and NFC-ready terminals are two great options with which to start.
  • For e-commerce merchants, having a standard checkout cart should suffice — provided your online store is mobile-ready.
  • For traveling sales teams or those who frequently work off-site, it makes sense to invest in mobile credit card readers.

People forget their wallets and keys all the time, but they almost never forget their phones. By updating your payment environment for smart devices, you can secure a much larger slice of the $500 billion mobile payment pie.

Let CDI Technology help you imagine, design, and implement opportunities to extend the value of your ERP.
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