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    February 2013
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    Mobile Payments for Businesses

    Gerald Trites, FCA, CPA

    Recent trends in the availability of systems designed to allow accepting credit cards on a mobile basis are worth considering for many businesses. The most popular types of systems are those that add a card reader to a smartphone or iPad, which then communicates with the website of the provider to record and  process the transactions.

    The attraction of these systems is that employees can be provided with the suitably equipped smartphones or iPads and be able to accept payments from customers on the spot, without requiring them to go to a checkout. In addition, it can enable transactions to be processed in the field, which can be an advantage for many types of business.

    The low cost is a key advantage. Typically, there is a monthly subscription cost of about $10 – $15. Then there is a transaction fee based on a percentage of the value of the transaction, ranging from 1 – 3%. That’s a modest cost compared to the traditional costs of accepting credit cards.

    But the real advantage of implementing the ability to accept mobile payments is a strategic one. If customers can buy on the spot, without waiting until they go to a checkout, they may be more likely to actually buy – and to come back.

    The model fits some types of business more than others. Situations with a small retail store are perhaps less likely to benefit since they already get close attention for the staff and the checkout is often in the same area as the goods. In other cases, there are more effective models available, albeit more expensive ones. A good example is a restaurant that accepts credit cards, debit cards and cash as a matter of course and has done so for years. Many of them now use the dedicated mobile card readers that are specifically designed as extensions of their POS systems. These readers are sophisticated and fully integrated, and offer a full range of capabilities. The smart phone/iPad model would not make any sense for them.

    For other businesses, however, the smart phone model may make good sense. For example, a garden center might benefit greatly, since they usually have their wares in a wide area and customers need to pick out what they want, get the goods into their vehicle and go inside to pay for them. Being able to pay at their vehicle or on the grounds of the center could encourage customers to buy more often by removing some of the inconvenience involved with paying for their purchases. Other businesses come to mind – building supplies stores, u-picks – any business that sells goods that are spread out over a relatively wide area.

    Stores like shoe stores also could benefit, because they are places where the sales staff spends quite a lot of time with the customers fitting up the footware in which they are interested. They experience with the sales person could culminate in the actual sales transaction being processed by the sales person on the spot. A nice touch.

    New systems that are available for smart phones and iPads include, among others, Intuit’s GoPayment, PayAnywhere, Square Card Reader and VeriFone SAIL. There will be many more in coming months.

     

    The MONEY® Network