Make It Easy for Customers to Pay

Mobile payment solutions give your customers opportunities to pay their way.

May/June 2016

More and more, customers want flexibility in how they pay for services and goods. In the ancient history of the internet, it took some cajoling to get folks to trust making digital payments online. Now the world has another medium for quick transactions: mobile payments.

In 2016, mobile payment transactions in the U.S. are expected to total approximately $27.05 billion, up from $8.71 billion: a growth rate of 210% in one year.

Businesses have a chance to take advantage of the growing trend of most adults in the U.S. carrying a smartphone with them, says Jonathan Stark, a mobile strategy consultant who works with consumer brands, which opens the door to more mobile transactions. Todd Ablowitz, president of consulting firm Double Diamond Group, says the necessity for flexibility is clear. “They want to get paid; they need to get the money, but nobody is thinking about that process,” he says. “They’re thinking about the result, which is getting money in their accounts.”

Why more and more customers turn to mobile pay

The pace of adoption of mobile payments may quicken on the customer side, says Stark, because of frustration with other payment options that have emerged. Part of what drove the spread of chip card payments was a response to the data breaches that struck a number of U.S. retailers. But many consumers find inserting their cards into a slot and waiting for the chip to be read—a process that is often slower and chunkier than the traditional credit card swipe—to be clunky, which can make mobile payments more attractive to use.

Mobile payments can be faster and easier, with less friction, Stark says, which might tip the scales in favor of broader use. For example, restaurants that let guests book reservations through the OpenTable app might also let customers pay for their meals directly through the mobile app without waiting for staff to return with a check. OpenTable also includes certain incentives, letting users earn points by booking reservations and then exchange those points for gift cards at participating restaurants.

Services such as Square, Apple Pay and Samsung Pay have opened the way for more transactions in the virtual world, making it simple to access money via a digital wallet and to accept credit card payments through smartphones and tablets.

The advent of these big players in mobile payments has increased awareness among consumers, says Ablowitz, but the trend may have been inevitable. “The technology impact of the cloud, high-speed networks and mobile phones has enabled this evolution.”

There are also standalone apps, such as Cover, that give restaurant customers a way to pay through their smartphones, and also to split the bill if people who dined as a group want to pay for their meals separately.

Even if a retailer or other type of business is in the process of switching to chip-based card payments, Stark suggests they allow for mobile payments during the transition. It could be the kind of convenience that differentiates a business from its competitors—especially if the company also has a loyalty program associated with a mobile app. For example, Sam’s Club and First Data have teamed up to offer services and solutions that let merchants accept credit card payments on mobile devices, including smartphones and tablets, and offer loyalty incentives to their respective customers.

Benefits for business

On the business’ side, using something such as Square can be a quick, inexpensive option compared with more elaborate point-of-sale systems, Stark says. The tradeoff is that Square might not have robust, intricate features, but POS systems can be somewhat monolithic. “If you’re a small business owner and you just want to start taking mobile payments, Square Register is interesting,” he says.

In addition to Square, there are services such as QuickBooks GoPayment for taking payments through tablets and smartphones. PaySimple’s solution includes a mobile app and card reader that can process credit cards and automated clearing house (ACH) e-checks.

Square and its mobile payments peers tend to offer rates that can be lower than what banks and credit card companies might charge—although this can also depend on the annual volume of transactions that are processed, so it is probably best to read the fine print.

Mobile payment services also promise fast deposits of cash after transactions are complete—for instance, within one business day for PayAnywhere Mobile—though suspicious transactions might be held up for longer stretches.

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