Mobile payments are fast, safe, and convenient. This is why they have become the most popular way to accept in-person payments. By the end of 2020, mobile payment volume will have exceeded half a trillion US dollars.
There is no end to NFC (near field communication) payment growth insight, which is why there is no better time to adapt to mobile payment technology.
This article will tell you everything you need to know about this technology and what it entails, from accepting mobile payments to making mobile money transfers.
Table of Contents
What is Mobile Payments Technology?
Mobile payments are a type of secure transaction, which takes place through a phone or another mobile device digitally. They are facilitated by mobile wallets; apps that store credit and debit card details to enable digital payment using a mobile device. Users download a mobile wallet app and add credit or debit card information, which the provider stores safely.
Supporting this point, factoHR.com rightly mentioned that such payment methodology promotes a technologically advanced culture that reduces fraudulent activities as the entire transaction occurs in an encrypted form. To enable the permission, security measures such as thumbprint authorization are required to access and make payments through the mobile wallet.
Apple Pay is the most popular wallet according to a Boston Retail Partners study. Two-fifths of all retailers plan to accept it in the foreseeable future, and 37 percent already have.
How Does Mobile Payment Technology Work?
NFC enables a payment reader and a mobile device, like a phone, to communicate wirelessly when they’re near to one another, hence the term “near field.” To process payment, your phone must be less than two inches from a reader. NFC is part of radio-frequency identification (RFID), a technology that lets us identify objects and properties through radio waves. In a mobile wallet transaction, the POS and your device are communicating using RFID. To process a payment, they exchange encrypted information in a matter of seconds.
Mobile payments are light years faster than cash and much faster than transactions involving magnetic stripe and chip cards.
After Apple Pay, the most popular companies offering mobile payment apps are Samsung Pay and Android Pay (Samsung resp. Google’s mobile payment solutions). All recent Android and iOS device models can support a mobile payments app.
Which Businesses Can Benefit From Mobile Payments?
Adding mobile payment technology can benefit the vast majority of small businesses, but especially cash-only ones like crafters, farmers’ markets, and food trucks. According to experts, cash-only businesses that begin using mobile payment programs to accept credit card payments see an instant increase in sales and their customer base.
The majority of conventional credit card companies charge a lot more than mobile payment providers per transaction. The latter helps small businesses keep low costs.
Why Should You Implement Mobile Payments?
First and foremost, implementing them represents an opportunity to stay on top of tech advances. According to recent research, consumers shop more frequently when they use mobile payments and spend over 100% more money through digital channels. Retailers and banks that move to include this tech in their offerings swiftly will attract interest and generate customer loyalty as early mobile payment adopters.
Track Inventory and Trends
Small businesses can struggle with inventory tracking and should use an inventory management system. It’s possible to serve customers better by automating this process. Small businesses using mobile payments can only benefit from tracking the products and services they’re offering more effectively. This will help them grasp their customers’ needs better. They can find out more about their customers and use this information to offer better service quality and capture payment data.
For example, a food business will find out it sells a lot of pizza on Saturdays and take steps to ensure the required ingredients are always available. They will then sell even more pizza and improve customer service by meeting demand.
Make Accounting Easier
Every business needs at least a basic accounting system that allows the owner to pay bills, issue invoices to customers, and share payments with an accountant. You can improve cash flow management by introducing a mobile payment solution. You will be paying less in overhead and bank fees with the help of mobile payments. One more way of cutting your expenses that often gets overlooked is using online banks instead of traditional ones. For instance, online banks like Mercury don’t charge for incoming payments while a lot of traditional ones still do.
Mobile payments can ensure a consistently seamless experience online, in-store, and at any crucial customer contact point. Integration with reward and loyalty programs enables easy access to critical programs for customer retention irrespective of your location. This helps you run your company more efficiently.
How is that? For one, these providers encrypt customer data through tokenization. The customer downloads a payment app and adds their details to it, including their credit card number. Then, the number is replaced by a token, which is protected by a password or touch ID. As it is not a real card number, the token is useless to hackers.
These measures minimize the likelihood of fraud and elevate the level of security. If someone steals the customer’s phone, payment activity is frozen at once.
Contactless payments are the most convenient transaction because they can be completed at the speed of light. They reduce wait times at checkout and allow customers to access more accounts without the hassle and risk of carrying a physical wallet around.
Last but not least, your business will save money on credit card fees by adopting mobile payments. There are even some free mobile payment systems. The customer needs to meet a certain incentive threshold for the provider to charge a transaction fee.
Examples of Mobile Payment Adoption
Samsung, Mastercard, and some online grocery stores partnered to make an app allowing people to place direct orders from smart fridges. This initiative was highly successful. Honda and Visa partnered to create a system of in-vehicle payment in 2016, which enabled drivers to pay for gas and parking.
Mobile payment use represents a shift to a future of omnichannel payments. By implementing mobile payments into sites and apps, businesses can get in on these trends early.