Introduction and payment choices
Business is now transacted on the move. According to the latest figures from the UK Cards Association, total spending on payment cards in November 2015 reached £53.2 billion (around $75 billion, or AU$103 billion), with rises partly attributable to the impact of Black Friday and Cyber Monday.
Richard Koch, head of policy at the UK Cards Association, said: “Making a contactless payment is fast, easy and secure. With so many retailers now accepting this technology, we are sure consumers will continue to vote with their wallets and use contactless cards as their preferred way to pay.”
There is no doubt that the success of contactless payments is heralding a new era of mobile commerce. Consumers want to pay quickly and conveniently, which today means using their smartphones.
“While we’re excited to see consumers saying they expect to triple their weekly spend using mobile payments over the next five years, we at Visa think those numbers could be rather conservative and that the actual adoption rate will be much higher,” commented Jeremy Nicholds, executive director for Mobile, Visa Europe.
He added: “This is particularly true when you look at the growth in contactless usage, which saw European usage grow by two times and spend grow by three times over the last 12 months.”
For SMBs, offering the right payment methods has always been a vital component of their businesses. With more consumers wanting to buy on the move, ensuring your business has the right mobile payment methods on offer is a commercial imperative that can’t be ignored.
The smartphone and tablet have not only delivered a mobile digital wallet to consumers, but this technology can also be used by your business to enhance its payment systems. With the addition of some low-cost hardware coupled with an app, it is possible to turn a smartphone or tablet into a fully functional payment device.
VeriFone commented: “As retailers look to engage with today’s more mobile-orientated convenience-focused consumers, most accept that multimedia, touchscreens, self-service mobile and tablet-based retail platforms are all now crucial to their long-term success.”
According to PayPal, in the UK alone, 14 million adults regularly shop via mobile, and consumers will spend £2.5 billion (around $3.5 billion, or AU$5 billion) shopping on their mobiles in 2016 – a growth of 42% year-on-year.
Developing a mobile POS (Point of Sale) system for your business isn’t complex. At the moment there are a number of options to choose from including:
What all these systems have in common is that they use a standard smartphone or tablet to connect a card reader to your business’ e-payment systems. They offer a level of mobile payment freedom that many businesses are now realising can enable them to tap into the trend of swift mobile payments consumers are increasingly demanding.
Worth the outlay?
One of the concerns that all businesses have is the cost of these new payment systems, and whether this is actually worth the outlay. What is clear is that consumers are forcing the issue and demanding these new payment systems. Those businesses that stay ahead of the payment wave will be the winners.
Cost of course will vary between suppliers. The card-reading device that is either a standalone terminal or one that connects to a smartphone or tablet can cost between £29 for the basic device from iZettle, to around a hundred pounds for other hardware.
The ongoing costs will be determined by the level of sales that you will put through the systems. PayPal for instance has quite a complex payment fee structure, but generally your business would pay 3.4% plus 20p per transaction, which can fall to as low as 1.9% plus 20p for larger payment volumes.
Turning to iZettle, it uses what is called a ‘Smart Rate’ payment system, which begins at 2.75%. A business taking £5,000 in card payments with iZettle during one month will have a Smart Rate of 1.92%, saving them £41. A business that processes £13,000 in monthly sales will get a Smart Rate of 1.5%, saving £162.
Needs, costs and maintenance
With so many mobile payment options to choose from, selecting the one to adopt for your business is a matter you should approach carefully. Follow these steps to find the perfect mobile payment solution for your business:
1. Assess your customers’ needs
If you are unsure which type of mobile payment system your customers would prefer – ask them! Polling your customer base will reveal how they shop and therefore which platform your business needs to adopt.
2. Talk to your bank
The banks of course have a close working relationship with all the payment providers. Speak to them about which systems they recommend to interface with your existing merchant account, and which ones provide the fastest payment methods, as you don’t want to have to wait long periods before a mobile payment is credited to your account.
3. Consider all the costs
Look closely at the payments that your business takes at the moment. To get a clear idea of costs, you need to assess the number of transactions your business is likely to process with your new mobile payment system.
4. Trial the services
Once you have a shortlist of potential payment providers, you now need to test these in your real business. Assess how your customers adopt the systems, but also look at your payment workflow and the back office support you have to do.
5. Support and maintenance
When things go wrong how efficient is the mobile payment provider at resolving your problems? It’s important that your business is fully supported across the payment methods it chooses to offer to its customers.
6. POS integration
Just having a payment method that attaches to a smartphone or tablet is all well and good, but how does this technology connect to other POS systems? Look for high levels of integration that will enable your business to expand its systems in the future.
VeriFone concludes: “Thanks to new developments in technology, innovation will play an increasingly powerful role in retail strategy. For the consumer, these new platforms will bring the allure of greater convenience and better service – everything from electronic wallets on a mobile phone to the opportunity to easily cash in rewards and discounts electronically.
“For retailers, where image, promotions, seasonal pull and loyalty are important, new mobile and POS devices and applications will drive footfall with smart apps and engaging new services.”
For most businesses, providing more mobile payment methods in-store or when on the move is going to be a big part of their future. Backed by existing payment infrastructures that themselves have tried and tested security, your business can adopt mobile payment methods today, ensuring you are ready to ride the wave of the new payments revolution.