Why Mobile Payment Systems Might Work for Your Business

Much has been written about mobile payment options and if you read any articles about this topic you find that one or two companies dominate the discussions; however, the list of businesses creating readers/apps/programs continues to grow.  Though not an exhaustive list, this article compares 19 of the currently available readers, such as Intuit GoPayment, Square, and Flagship ROAMpay (http://tinyurl.com/cq7t4r5).  

What equipment will you need?

For most basic operations you need at least one of the following:

• Smartphone (e.g., 3rd generation iPhone running iOS 4.0 and higher, Android phone running 2.1 and higher, Blackberry)
• iPod touch (2nd generation and newer running iOS4 or higher), or 
• tablets (e.g. iPad and Android).

Others systems allow the business owner to expand their functionality when additional devices are used.  Square, for example, provides a card reader for “anywhere” payments but also turns iPads (running at least iOS5.0) into a Square Register with an additional app (squareup.com/register).   Do a thorough investigation of each reader you are considering.  Some are compatible with Android phones and/or Blackberry while others are not.   

Readers for swiping credit cards 

With credit card terminals already using card swipers to process payments, many businesses may feel the most comfortable investing in a mobile payment system that uses a similar type of tool.  

The most common type of reader for swiping cards is a “dongle” that plugs into either the headphone jack on a mobile device (for example, Square) or plug into the iPhones and iPads charger port (for example, Eventbrite, http://tinyurl.com/77bvczo).

Groupon has recently entered the market and instead of offering a dongle the company has decided that a wrap-around case as dongles could potentially snap off (http://tinyurl.com/6mhdlp6). Other systems with a wrap-around style include Mophie (http://tinyurl.com/26or6oy), and Chase Paymentech (http://tinyurl.com/7yd5dlz).  Yet another variable you’ll need to consider when selecting the right system for your business.  

Payments made with smartphone apps 

Google Wallet, which works with Android phones, has been around for about a year.  This mobile payment app first requires users to link their account with a Citibank MasterCard or load a Google Prepaid Card using any other credit card.  When at the store, customers “tap” their phone against a near field communications (NFC) reader/credit card terminal. (Apple recently announced that a iOS 6 Passbook will app is in the works, http://tinyurl.com/cq3ut82). 

More recently, FaceCash has emerged onto the mobile payment scene.  Instead of matching a customer’s signature with that on the back of their credit card to verify a purchase, “merchants use FaceCash to verify that [the customer’s] real face matches a digital image linked to [his or her] account” (https://www.facecash.com/).  

Like many other systems, customers activate their account prior to shopping.  During the registration process customers link their account with their checking or savings account (users also have the ability to load their card with cash at retail locations where FaceCash is used) and upload a government-issued photo (driver’s license or passport).  When at the retailer, customers tap their phone against the NFC reader or businesses use a CCD Barcode Scanner to scan the barcode on the customer’s phone and then compare the image in the FaceCash system with the person making the purchase.  FaceCash also allows the user to load loyalty program cards (e.g., airline frequent flyer accounts, supermarket frequent purchaser cards) which can be scanned at checkout.  A video that provides an overview can be found at: http://vimeo.com/17175906

Other payment options

PayPal is more recognized as a payment option for consumers who want to make online purchases without supplying their credit card number.  Instead, consumers authorize purchases at websites offering this option using their email and PIN number.  In 2011, PayPal had over 100 million active accounts worldwide (http://tinyurl.com/6leeyre).  

At least one home improvement store has implement PayPal as a payment option for customers.    In addition to using a card reader to swipe credit cards and accepting checks via the mobile device’s camera, businesses can process payments by asking customers to enter their telephone number and PIN on  the credit card process terminal. 

Comparison of costs for retailers

Transaction fees and other costs are likely to change as this technology becomes more widely used and as more competitors enter the marketplace.  Remember that you will need to consider the costs for processing each type of credit card you honor (can range from 1.74% to 3.7%), as well as whether there is a per-transaction charge (can range from $0.10 to $0.30).  

How might these fees add up during an average month and what might you expect to save annually?   Consider using websites such as http://tinyurl.com/cs4fwf4.  The site allows users to enter an expected monthly revenue, select whether credit cards are processed by swiping or being keyed-in, and see estimated costs for several different brands of mobile readers. 

Another question to think about: Based on your average customer transaction size – will one system provide more savings than another?

According to an article written about Groupon’s mobile payment system (1.8% transaction fee [2.7% for American Express] and $0.15 per transaction) compared to Square (2.75%  transaction fee but  no per transaction charge), Groupon’s system might be a better choice for sales greater than $15 while Square would cost the retailer less than Groupon for sales less than $15.00.  

An example that shows how these transaction fees impact sales: “On a $100 Visa transaction, Groupon would charge $1.95 vs. Square’s $2.75. That’s a 41% premium for Square” (http://tinyurl.com/6ncbxbn).  

Do this comparison for yourself based on common sales transactions you process.  With several variables to consider, including how you would prefer customer to “pay” for purchases, take the time to investigate several systems to find the best one for your business.  

Why You Might Want to Consider Offering Mobile Payments

Last week, I was at a restaurant where the serve took our order on her iPhone, swiped my credit card through a reader attached to an iPad, rotated the iPad screen toward me so that I could enter a tip and sign for my transaction using my finger, and asked me if I wanted a printed receipt or one emailed to me.    

The email receipt I received

Now, the transaction may not have been that much faster than a traditional restaurant transaction, but I did not have to wait for the receipt to print (or wait for the server to add a new role of paper to the receipt printer), search for a pen or use an electron stylus that is often tethered to credit card terminals, and calculate my tip.  I felt that the process was pretty seamless.  This restaurant used a system that involved both iPhones and an iPad register but several other systems exist where only one electronic device is needed to process a payment.  

You probably have head of Square (https://squareup.com/), among the number of other systems, which require a user to obtain a small scanner (most of which are provided free) that attaches to a smartphone, but several other systems exist.   This technology is evolving and you may find that you like a system that does not even require a consumer to use a credit card to make a purchase. 

In this posting I am going to touch on why you should investigate whether mobile payments could work for your business.

Consumer use of mobile technology

Recent statistics indicate that between 42% and half of all mobile phones used in the U.S. are smartphones (http://tinyurl.com/6q5rd5s) with capabilities that allow users to download apps they can use to make mobile payments.  Compared to the number of the consumers expected to own a smartphone at the end of 2012, 115.8 million, the percentage of users expected in 2015 is set to increase nearly 66% (http://tinyurl.com/cruhdlm).

So, that provides some insight about smartphone ownership, and we know from reports that the two most popular activities conducted on a smartphone are checking email and Facebook, but what about current data that describe purchasing using smartphones and tablets?  

• During the first quarter of 2012 34% of tablet and 17% of smartphone owners had made at least one purchase on their devices.  
• An even great percentage of smartphone owners (43%) used their device in a store “for a shopping purpose,” (http://tinyurl.com/8553tbh) which could include comparing product prices at other retailers and looking up product details.  

If over one-third of smartphone users are using their phones for these purposes it is possible that they may convert to mobile purchasers.  

Flexibility for businesses

I have shopped at a number of retailers where it would have been more convenient for me to make a purchase at a site other than where the cash registers were located.  Or, sometimes I have had to pay with cash or by check instead of with a credit card, my preferred payment method. According to one source, only 7% of transactions in the U.S. are completed with cash.  Hence, we are becoming a “cashless society” (http://tinyurl.com/d6wk5eg). 

Think about your business and situations where a mobile payment option might have been useful.

• Residential landscape contractors and growers delivering product can collect payments immediately rather than invoice and wait for payments,
• food and farmers’ market vendors,  agritourism businesses, and food tradeshow exhibitors  can provide more payment options, and
• landscape nurseries can process payments in the tree lot after selecting plants with customers.  

Benefits mobile payments provide businesses 

Aside from flexibility these systems provide, businesses also benefit from their use:

• These systems capture a fair amount of customer information, which can help the businesses create  a loyalty program (or take the place of an existing one),  
• transaction funds are transferred to the business more quickly – reducing the duration from “days to hours” (http://tinyurl.com/893svvx), 
• most mobile payment companies do not charge a setup fee or a monthly fee to use their system,
• there may be little or no requirement to purchase equipment (if businesses already own the required smartphones/tablets), and
• though percentage processing fees are applied to each transaction (can range from 1.74% to 3.7%) some companies have eliminated the per-transaction charge (can range from $0.10 to $0.30).      

In the next posting I’ll discuss a bit more about the different methods you can use to process mobile payments, including on that uses the consumer’s face to verify purchases!

Of Mice, Men and Ag Entrepreneurs

When I was in elementary school, my eighth grade teacher was a huge John Steinbeck fan. Therefore, I read several of his books and stories during that year. One of these books, "Of Mice and Men" was particularly meaningful to me. The phrase which is the source for the title of the book "The best laid plans of mice and men often go awry" has been particularly useful to me.

As I have worked with farm managers through the years, I have learned that there is a wealth of truth in that idea, that no matter how well we plan, circumstances often change, which puts our plan in a shambles. This problem occurs not only in the day to day plans for a farm business, but can also wreck the overall business plan of an agricultural entrepreneur. For this reason, I have found that contingency planning is one of the most critical components to the planning process.

The entrepreneurs who succeed are not always the ones with the best business plan (ok, I just gave a heart attack to some of my collegues who write in this blog... let's see if I can redeem myself). The entrepreneurs and managers who succeed are the ones who not only have a sound business plan, but have also developed a solid set of contingency plans for any aspect of their business plan that is critical to the overall success of the business. The contingency plan is nothing more than a 'what if' exercise.

What if profits do not perform to the expected level?

What if our source of financing falls through?

What if our interest rates rise?

What if our business grows faster than we expect?

What if one of our partners decides to leave the business?

etc.

     etc.

          etc.

For each of these 'What if' phrases, develop a contingency, i.e. what you will do, if any of these potential business back breakers were to arise. Then, when (notice I did not say "if") you have a breakdown in one of the key components of your plan, you will have a jump start on getting back on track.

Contingency planning comes easier to some than others. Practice can help. Think through each day what you plan to do, and then immediately think through what you will do if something goes wrong (or excessively right!).

For example, if you plan to make three marketing calls that morning, what will you do if your first customer wants to buy all of your product? What will you do if none of the three are interested?

Others still have trouble thinking through contingencies. Some may be so convinced of the success and infallibility of their plans, that they cannot think of what could possibly go wrong. Others simply have limited experience with their venture. In either case, it could be worthwhile to bring in a third party to examine the plans and actively 'poke holes' into it, identify the areas where problems could arise, or other weaknesses.

As I sit down with farm managers and ag entrepreneurs to discuss their finances, I have observed a consistent trend. Those managers who have a solid plan of where they are heading with their businesses are most often much more successful than those who do not, the ones who let their business just 'happen to them'. Those few individuals whom I have known who not only have a solid plan for their business activities, but also have thought through the contingencies are the rock stars, those who take the punches and keep moving.

Do you have a set of contingency plans for your business?

Best Practices for Farm Market Vendors

This week, our colleague Heather Mikulas will share some important tips for farm market vendors.  Heather is a Community Based Ag Development Associate at Penn State and works closely with farm markets in Pittsburgh, PA.  Thanks for your post, Heather!


Selling directly to consumers at farm markets is an option to take advantage of above market price points for first quality produce and farm products. Farm markets are a much-beloved part of many communities. People tend to put shopping at a market more on their want-to-do list and less on their to-do list. The interest of being involved in a market at a deeper, more meaningful level draws a large proportion of customers.

Consumer trends speak to the fact that more and more consumers are taking an interest in one or more of the following: where their food comes from, seasonality, food safety, economic development /town revitalization, recreational and social aspects of markets, nutrition, freshness, and so on. The USDA has shown national growth of farm markets to be almost 7% annually between 2002 and 2008. This illustrates the fact that purchasing food from local farmers and value-added producers speaks to consumers at many levels, and is much more than a trend. Farm markets are the perfect place to tap into a group of customers hungry for high quality and locally grown foods.

Another consideration for producers is that Pennsylvania is home to many small businesses that take a raw product and process it into something delicious. Those of us in the biz call this ‘value-added’. These types of products span the food spectrum and include baked goods, cheese and other dairy products, sauces, jellies and jams, and alcoholic beverages like beer, wine, and vodka. Home-based businesses like these account for many of our state’s small businesses. Farm markets can offer a safe place to test the waters as an agricultural entrepreneur starts and grows a business. Being aware of local, state, and federal regulations, as well as carrying proper liability insurance are all essential to ensure protection of your business and assets.

Having an attractive table at the market is a little bit of art and a little bit science. Stand back and look at your table as if you were the customer. Pretend it is a store. Why would someone want to come into your store and spend their money when there are other tables offering similar items? What do you see? Here are some tips:

• Produce should be clean and top quality, as well as arranged attractively.  Use vertical and horizontal space.
• Signs identifying the produce and price should be easy to read from 10-15 feet away.
• Think of flow--that is, can customers enter your store on the left, select items, and pay on the right?  This can maximize the number of potential transactions.
• Have a logo, theme color, mascot, etc.  Bookmark your farm in the customers' minds by giving yourself a standard visual identity across signage, bags, business cards, t-shirts, tablecloths, etc.  One successful grower simply used the color red to make their table stand out.
• If you have samples, make sure you comply with PA Act 106 and local health department regulations.
• Consider creating a newsletter or recipe of the week, sharing news from the farm, and/or ways to prepare seasonal veggies.
• Most of all, have fun and make friends!  YOU are as interesting as your product and how it was produced.  Make the customers feel like they are part of your success story.  A happy customer can be a walking advertisement, and a repeat customer.

Thanks again to Heather for these great farm market tips.  If you have further questions, please contact her at hem12@psu.edu.

We’re eating smaller, frequent meals. Do you have a snack for that?

Quite a few reports have been published lately that describe how the U.S. consumers’ eating habits are changing.  One noticeable trend is that we are snacking more. 

If you are a food retailer, manufacturer, producers, restaurateur, or have another role in the food industry offering snacks could be a huge opportunity.  Think about how you, too, could meet consumer need for mid-meal or meal replacement products.  

Some reasons we are snacking more: 

• Boredom, food budget,
• our hectic grab-and-go lifestyles,
• increased availability of portion controlled packaged items,
• and weight loss/weight management programs and experts suggesting that more frequent, smaller    meals may be the key to a healthier lifestyle. 

Regardless of the cause, snacking has become a norm.  According to the USDA Agriculture Research Service, most U.S. consumers (90%) snack at least once a daily  and 62% of men and 68% of men snack two or more times a day (http://tinyurl.com/7tzt4qt).  

Not only has the research been published as to how often we snack, but recently the Hartman Group (www.hartman-group.com) held an online webinar about snacking, titled “The future of snacking and the influence of global flavors.” During the webinar, the presenter indicated that consumers have an interest in snacks made with authentic “global” or “ethnic” flavors.  Current popular ethnic flavors included:

• Korean/kimchi, 
• Lebanese/falafel, and



Photo source: http://tinyurl.com/7os9k8e



• British gastro pub/pig trotters.  

Some of the flavors that we should expect to 
enjoy in the future are:

• Nordic/caraway rye crisps, 
• Moroccan/fennel crisps, 
• Ethiopian/puffed millet, and 
• Cambodian/lychee juice.  

It is easy to understand why U.S. consumers embrace ethnic flavors.  We are traveling more and are influence by the cuisines we try.  Some of us then return home and share meals made with these ingredients with family and friends.  It is also very likely that a consumer is embracing their heritage and preparing meals associated with their culture.  Or, like my family, cultures have been blended by marriage.  My sister-in-law is from South Korea and I can tell you that bulgogi (marinated beef) is delicious (especially when she uses kiwi and Sprit in the marinade).  

Whatever the reason – if consumers are eating foods with ethnic flavors at traditional meal times it only makes sense that they have an interest in snacks with a bit of these spices and tastes. 

Certainly, there are several other snack food trends that need to be considered including:

Photo Source: http://www.elskitchen.com/

• Consumer interest in “natural” snacks, 
• gluten-free options, 
• sweet and salty combinations, and
• low calorie options, for example. 

Deciding on the best snack for your business hinges on a few factors:

• Snacks that complement your current offering (do you already offer seasoned popcorn, nuts or other crunch snacks?), 
• your core products (e.g. fresh fruits/vegetables, meats, breads) and what snacks make sense for your business (if you are known for local fruits and vegetables does it make sense to offer your own brand of dried pineapple slices?), 
• flavors or cuisine you currently focus on (can you incorporate Asian flavored products with what you current off?), 
• your customer base (do you or could you tap into a local ethnic community that new snack offerings may appeal?), and
• what equipment you need to process (or can your outsource manufacturing?) and stock new snack items (do you have or will you need freezers or coolers for dips and other perishables?).

Just a few things to think about as you explore how you could use trends, such as snacking, to increase sales.  

The Value of Social Media as a Market Research Tool

You've got a Facebook page and/or Twitter account for your business.  You're letting followers (hopefully also your customers!) know when you're market is open, what's happening on the farm, what events you've got planned for them, specials you're offering, and so forth.

Source: http://www.homegauge.com

This article, that appeared on Mashable, reminds business owners of the value that you can pull from social media engagement with your followers. So, how can the messages and information on social media help you and your business?  Here are the author's five points:

1. Shed light on perceptions of your brand.  While you may not think you have a brand, you do.  You have a reputation and the public and customers have perceptions of you, the business, the products you produce and/or sell, your employees, your customer service, etc.  So take advantage of social media and take note of comments and questions that followers make. 

2. Peek into your customers' heads. By keeping tabs on what your customers are saying, you learn what is important to them.  This knowledge can help you frame questions that you may have, determine what you can provide that they will value, or if you should make changes to keep up with new trends.

3. Understand which products resonate the best.  When you post something to Facebook or Twitter, which items are generating the most buzz?  How many comments are followers making and what are they saying?  Are your posts being shared? This information is there, use it.

4. Learn from major customer issues.  Sometimes a follower/customer will post a complaint or question(s) that you thought was clearly communicated.  These things happen. Rather than becoming defensive, take these occurrences as opportunities to learn and make necessary changes.  Remember to respond to these complaints and questions, on- or off-line as appropriate.  Kathy Kelley provided tips on responding to negative reviews in this past blog post.

5. Construct a social media customer conversation plan. Similar to developing a social media strategy (for content sharing), consider developing a plan on how you and your team will interact and converse with followers/customers on social media.  How will you categorize social media feedback?  What conversations do you want to have?  If you have more than one person involved in your business's social media presence, who will be responsible for different actions?

Source: www.buzzom.com

Make sure that you're taking advantage of the information your followers and connections are sharing via social media.  You could be missing out if you're not "listening" as much or more than the amount of sharing you do.