Mobile payment systems are sweeping the consumer landscape, offering speed and flexibility to both customers and retailers. Mobile payments include both systems that allow consumers to make payments with their smartphones, as well as systems that allow merchants to accept payments on their smartphones. Some systems even enable phone-to-phone payments.
From movie tickets to meals, buyers are growing accustomed to making purchases with their smartphones. This means that while some small businesses have expressed misgivings about the security of mobile payments, those who don’t adapt to consumer expectations may soon find themselves at a disadvantage.
According to a study by the Aite Group, mobile payments will hit $214 billion by 2015. That’s an astonishing 68% compound annual growth rate from $16 billion in 2010. Major retailers like Best Buy, CVS, and Wal-Mart are forming their own mobile payment network; Square, the mobile payment company started by Twitter co-founder Jack Dorsey, is processing $6 billion in annual sales, with over 2 million users.
The good news is that company size is not a barrier when it comes to succeeding in the mobile payment sector. Small businesses often have a unique advantage to going mobile because they don’t need to integrate the new system with a complex payment infrastructure.
But the advantages don’t stop there. Once your business begins accepting mobile payments, the benefits add up quickly.
- Mobility and flexibility. Mobile payments allow you to close deals wherever your customers are. Meeting buyers at trade shows, conventions, and conferences can turn conversations into transactions and turn a networking opportunity into a direct sale.
- Capturing the impulse buy. It’s long been known that many impulse purchases are made with a credit card. Analysts estimate that as many as 80 percent of mobile payment purchases would not be made without a mobile system available.
- Immediacy. Being paid on the spot is faster than waiting for a check and eliminates future invoicing and collection issues.
- Competitive advantage. While mobile payments are indeed on the upswing, it’s a safe bet that many of your competitors haven’t yet climbed on the bandwagon. By adopting mobile payments now, you can position yourself as the option that offers convenience and flexibility.
- Cost-effective fees. Mobile payment systems offer several fee options tailored to your needs. Start-ups and small businesses that experience unpredictable revenue flow can choose a pay-as-you-go option; firms with a steadier volume in sales can save money with monthly or annual plans.
- Sustainability. Mobile payments eliminate the paperwork of checks, invoices, and hard-copy receipts. Instead, the receipt is emailed to the buyer, and the transaction is digitally accessible to both business and consumer.
- Simplicity. Mobile payment technology takes only a few minutes to set up and just moments to operate, whether by swiping your buyer’s credit card or manually entering their information.
- Security. While some businesses have worried about data security in mobile payments, the same protections are in place as with a credit card terminal. The data is encrypted, consumers can choose additional security levels (such as two-factor authentication), and transactions are covered by the Electronic Fund Transfer Act.
Cash and credit cards aren’t going away anytime soon – but with global smartphone ownership set to double by 2016, according to Portio Research, the mobile payment market is quickly becoming a dominant sector on the consumer landscape. Small businesses that adapt to digital wallets and mobile payments now will position themselves for both higher profits and a loyal customer base.