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Lots of businesses shy away from accepting credit card payments, often because the fees are outside of their budgets or it just isn’t practical. If your business is among them, the current growth in technology solutions that allow mobile devices to accept credit card payments may prompt you to reconsider.
Businesses that use mobile devices to process credit card payments stand to gain several advantages over their cash- or check-only competitors. One is that simply offering these options can show customers you’re on top of evolving technology and payment trends.
And by making it easier and quicker for consumers to spend money, it’s likely that customers will spend more. You may capture more impulse purchases and be better equipped to handle spikes in customer traffic. Either can lead to a heftier bottom line.
What’s more, the equipment needed to accept mobile payments is often less expensive than the point-of-sales terminals and magnetic strip readers traditionally used to process credit card payments. Similarly, ongoing fees charged by some providers of mobile payment solutions may be lower than the processing fees levied on traditional credit card transactions. The costs may be low enough that businesses that previously handled only cash may find they now can afford to accept credit cards.
The term “mobile payment” can refer to several kinds of technical solutions. Many mobile payment acceptance solutions include a credit card reader that attaches to a mobile device and an “app” or software to process the transactions.
Another option, near-field communication (NFC) technology, allows two devices to exchange information when they’re close to each other. Customers who’ve stored credit card data in their smartphones, literally turning them into “digital wallets,” can just wave their devices near a business’s NFC reader to make a purchase.
As this technology continues to gain acceptance, however, security becomes a key concern. The PCI Security Standards Council (the group responsible for developing the standards to which businesses processing cardholder data must adhere) recommends that companies considering off-the-shelf mobile payment acceptance solutions look for providers that offer “validated” solutions. This means that cardholder data is encrypted before it enters the mobile device, reducing the risk that criminals could intercept the data.
The Bottom Line
To be sure, not all customers will be interested in mobile payments. But quite a few are: According to IT research firm Gartner, worldwide mobile payments are forecast to more than triple between 2012 and 2016, growing from $171.5 billion to $617 billion.
For additional information on our small business advisory services, please contact Donna McClintock, CPA, at 302.225.0600 or click here to email Donna. In a brief consultation she can assess your situation and determine the best way to proceed.