The future of payments is now. The use and popularity of mobile payments are continually increasing, so it is time for your business to take advantage and begin accepting them. Now has never been a better time to start obtaining alternate forms of payment, and the best part, they are easy to set up.
Various payment options are available, including credit and debit cards, mobile wallets, and mobile apps. These platforms are convenient for companies and consumers and are tailored for a variety of transactions, from paying a contractor to purchasing a new laptop.
As paying via smartphones become more commonplace, we will likely see a continued shift away from traditional payment methods. So keep reading to learn the different types of mobile payments, how mobile payments work, as well as the advantages and how to get started.
Types of Mobile Payments
Mobile payments are any payment made using a mobile device such as an iPhone or tablet. This can include in-app purchases, mobile commerce transactions, and peer-to-peer payments. These payments are convenient because they can be made anywhere and anytime.
Learn about the different mobile payment types below:
Browser-based mobile payments are an excellent option if you’re looking for a new way to receive payments. You might hear this referred to as a web-based or even an online payment. With this type of mobile payment, customers enter their payment information into your website on their mobile phones.
App-based payments are similar to browser-based in terms of the process. Customers enter their payment information into the app versus a browser, and the transaction is then processed through the app.
Customers who use app-based mobile payments tend to be more engaged with the company or brand since they have taken the time to download the app and make a purchase. Unfortunately, creating a mobile application for your business can take a lot of time and money, so be sure to weigh the pros and cons to determine if this type of payment is right for you.
Mobile credit card readers are a great way to process customer payments on the spot. They’re quick, easy, and convenient, perfect for businesses on the go. Plus, most card readers today also process digital wallets, making it even easier for customers to pay.
Mobile processing can also use QR codes. QR codes are two-dimensional barcodes scanned using a smartphone camera. A QR code can provide additional information about a product or service. When paying from cell phones, QR codes are used to process payments without the need of a physical credit card. Instead, your client scans the QR code and enters their payment information into the associated app.
Contactless payments allow your customers to make a purchase without having to swipe their cards. The merchant device receives payment information from the reader. The POS system processes the payment using Near Field Communication (NFC) technology, which wirelessly sends information between their credit card and phone. More about this in the following section.
How Mobile Payments Work
Mobile payments are made possible by two types of technology, MST and NFC. The difference between them depends on how your customers make the actual purchase.
NFC technology allows two devices to communicate with each other when within close proximity. NCFs use a virtual token that stands in for the card numbers, which is transmitted to the bank or credit account.
MST, or Magnetic Secure Transmission, uses magnetic pulses to stimulate the card swiping motion, allowing customers to use their mobile phones to make payments at traditional POS terminals that do not have NFC capability.
Encryption is also used in both forms of technology for mobile payments to protect users’ information. When customers pay using their phones, their data is encrypted so that it can not be intercepted and misused.
Benefits to Mobile Payments
Your customers are already using their phones for just about everything else, so it only makes sense that they would want to use them to pay for your products and services as well. Mobile payments are fast, easy, and convenient—three things that customers always look for. But there are additional advantages to you and your business.
- Payments via your smartphone are secure – When you accept payments from this technology, you use some of the most secure payment methods available. These payments are processed through layers of encryption networks, so it is difficult for hackers to access customer information.
- Mobile payments can save your company money – Did you know that businesses that accept mobile payments can save money on transaction fees? This is because mobile payment processors typically charge lower fees than traditional credit card processors.
- You can use mobile payments to get paid faster. If you’re used to waiting for customers to mail payments or send via ACH, you know it can take weeks to receive the money. But with mobile payments, you can get paid almost instantly. Plus, the convenience of sending directly to your client’s phone, will almost guarantee a fast return.
- Manage your cash flow – Best of all, mobile payment systems can have additional functions for businesses to track their sales and overall spending more effectively. Not only do you get a visual record of each transaction, but some platforms enable you to utilize a cash flow management system to make better-informed decisions about your business and operating decisions.
Successful Payments with Mobile Apps
Mobile apps are becoming increasingly popular as a way to manage finances. In fact, according to a recent study, roughly 79% of Americans now use mobile apps. While there are many ways for your customers to pay you using a mobile app, the following tips will help ensure that your first transactions are successful.
- Choose a reputable app: Make sure that you’re using an app from a trusted source. Study reviews and ratings before downloading a new application, and only download apps from official app stores such as the App Store or Google Play.
- Check security features: Before making any payments, check that the app has robust security features. Look for features like encryption and fraud protection.
- Make sure the app has good customer service: If you ever doubt whether a payment went through, make sure you have a consistent line to the app’s customer team for assistance. Even better if they have multiple forms of contact such as email, chat, and phone support.
When it comes to technology, there are a lot of options out there, and businesses today are under more pressure than ever from their customers to adopt the latest and greatest technologies.
Fortunately, mobile payments are safe, fast, and easy, with many benefits that will make life easier. However, it is crucial to keep up-to-date and research your options before making any decisions. Confirm which technology works best in conjunction with what matters most within your organization.
FINSYNC’s network of bookkeepers and accountants is a great resource if you are looking for these services. It’s free to get matched based on budget, proximity, and business objectives.