Tuesday, June 19, 2012

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!

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