|Dave Pelland has extensive experience covering the business use of technology, networking and communications tools by companies of all sizes. Dave's editorial and corporate experience includes more than 10 years editing an electronic technology and communications industry newsletter for a global professional services firm.|
Accepting Small Business Mobile Payments
For a growing number of small businesses, accepting payments via a tablet device or smartphone can improve cash flow and convenience. In addition, mobile payments can allow a company to conduct business easily in locations where traditional cash registers may be impractical.
A variety of services are competing to provide the technological infrastructure needed to power mobile payments, giving small businesses a variety of choices.
Payments Nearly Anywhere
Mobile payment technology turns smartphones and tablets into point-of-sale systems in two ways. In the most common approach, a small card reader plugs into a device's earphone jack. When a payment card is swiped, and transaction information is entered on the device's screen, the data is encrypted and transmitted for processing. If a merchant doesn't have a card reader, they can simply enter the payment card data directly on the screen.
Mobile payments offer a number of potential benefits to small businesses, starting with the ability to accept credit or debit card payments where they provide services or sell goods. People who perform services at customer locations, or merchants who sell outside of a retail store, can accept payment cards directly at the point of sale.
Customer receipts can be sent by email, or your mobile device can be connected to a point-of-sale terminal or printer if you're selling items or providing services in a fixed location.
And because mobile payments are designed to work with smartphones and tablets, merchants can begin accepting payment cards without having to invest in leasing payment card terminals or point-of-sale equipment.
Accepting mobile payments also allows small businesses to begin accepting payment cards without having to establish a merchant account or sign a contract with a payment processing company.
A variety of companies offer mobile payment support services designed to help small businesses. Popular choices include offerings from Square, PayPal, Intuit and other providers.
Fees generally range between 2.5 percent to 3 percent of each transaction, with lower rates available for merchants with a large transaction volume.
Improving Cash Flow
Another critical advantage mobile payments offer is the potential to increase revenue, since customers often don't have cash for impulse purchases or are generally willing to spend more when they're using a credit card.
Mobile payments can also provide access to funds sooner, because customers can pay immediately after a service is provided. Instead of sending an invoice and waiting for payment to be sent, companies can encourage customers to make an immediate payment with a credit or debit card. And for companies that purchase supplies to provide a service, receiving payments sooner reduces the amount of time it takes to recoup their investment.
While some merchants or consumers are understandably concerned about the security implications of mobile payments, the technology offers security features that are at least as strong as in-person or over-the-phone payment card transactions.
For example, payment data is automatically encrypted before it is sent via a wireless network to the processing company. Because the data is sent automatically, there is often no need to enter information manually.
As another potential advantage, the customer doesn't have to worry about his or her payment card being brought to a back room for swiping. In addition, using payment cards more frequently can reduce the amount of cash a merchant has to deposit (or is exposed to potential theft).
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