Smartphones are the modern equivalent of the multipurpose Swiss Army Knife. The only things the smartphone hasn’t totally replaced are your keys and wallet … yet. This is quickly changing with mobile payments as the financial technology space evolves. Banks are offering customers the ability to pay for purchases by using their mobile devices, and new FinTech apps make transferring money between consumers and businesses faster, easier, and cheaper than ever before.
While many small businesses are reluctant to purchase NFC readers due to the hefty costs ($300–500 per device and large merchant fees), there are cheaper alternative terminals. And mobile payments offer many advantages including convenient and secure transactions. Even if you don’t intend on changing your payment systems in the near future, there are a few notable features of popular Apple, Google, and Samsung platforms that all merchants should know about. Here’s the rundown:
Apple Pay is bundled with the iPhone 6 and 6 Plus, and can also be installed on the Apple Watch. The main selling points are convenience (a single touch check-out) and safety (an encrypted Device Account Number in place of your credit or debit card number). It’s easy to brush this off as another trend for Apple fans, but this payment system does offers a few helpful features:
A Simpler Process
Since customers only need to hold their phone by the NFC reader and approve the purchase with their fingerprint, the payment transaction is smoother and quicker, which provides retailers with a more efficient checkout process.
Secure tokens are used in place of actual credit card details. By promising greater payment security, retailers can gain more trust from their customers.
No Additional Fees
Rather than charging retailers for the service, Apple takes a cut of existing credit card transaction fees.
Apple Pay’s biggest hindrance is the lack of NFC readers now. But with Square’s inexpensive reader (in partnership with Apple), that may change soon.
Retail Loyalty Support
Instead of carrying different member cards, customers can redeem loyalty points through the payment app on their phone. This gives business owners a chance to develop customer incentive programs.
Unlike Apple Pay, which is restricted to the iPhone 6 and 6s, Android Pay is supported on a greater variety of phone models, including Acer, HTC, Samsung, Sony and Motorola models, among others.
Android Pay uses unique tokens for each transaction, which reduces the risk of unauthorized charges.
Similar to Apple Pay, Samsung Pay is limited to a few devices: the Galaxy S6 line and the Galaxy Note 5. Its primary difference from other payment systems is support for magnetic secure transmission (MST). Rather than requiring merchants to purchase specialized readers, MST simulates a card swipe during a purchase. This means customers can use Samsung Pay at your store even if you don’t have an NFC reader. Customers simply choose the card they’ll pay with and then place their phone by the credit card reader to make their purchase.
Should You Adopt Mobile Payment Platforms?
Whether you’re a digital merchant or traditional retailer, keep your customers’ needs in mind. It’s easy to get caught up in shopping for NFC readers and updated payment gateways, but hefty technology investment is a moot point if customers aren’t using payment apps.
It might seem like a novelty now, but with its increased security and convenience for customers, mobile payment transactions have been predicted to increase by 210% by 2016. As a small retailer, you need to consider if this technology best suits your business and your consumers. Otherwise, your competitors could take an early lead and leave you behind in the dust.
Alex Harris is Connectivity’s Eastern Region Sales Manager
Top image credit: ratmaner / Shutterstock