Mobile payments are gaining popularity around the world. According to reports, 36% of smartphone users all over the globe will use a “mobile phone proximity payment app” in 2019. This is approximately 938 million people. The U.S. is among the top ten countries that use their mobile devices to pay for their purchases – holding a strong 6th position. It is believed that as smartphones become more sophisticated, more and more people will feel comfortable using it for payments.
Without a doubt, this is a payment method that businesses should consider as a part of their payment processes. Before you integrate it with your business processes, you might want to get to know more about it first.
What are mobile payments?
Just like the other popular purchasing tools, mobile payments offer convenience and security. They support the concept of a cashless society by using smartphones as an electronic wallet. Consumers can use their mobile devices to link multiple cards (e.g. credit, debit, and other rewards cards). The digital versions of their cards are usually saved in a mobile app. This allows consumers to pay for purchases without the need to take out their physical cards.
How it all works
This payment system uses a mobile point of sale system (mobile POS). It is a terminal that is set up with mobile devices like smartphones, laptops, and tablets. Instead of a PIN (which is what standard POS system needs), this system requires either a phone or tablet in order to operate.
Of course, having the system does not mean you can automatically accept mobile payments. You need to ensure that it will work with the NFC technology. That means the cards, chips, and mobile POS systems are all seamlessly compatible with NFC technology.
It is also important to note that a mobile payment requires near-field communication. It can only intercept data from NFC enabled cards and mobile POS systems within a short distance of around 1 to 4 inches. It does not have the same range as Bluetooth technology that has the ability to connect from a distance of up to 30 feet. This is actually a good thing because the further you are, the more vulnerable and exposed the data is to hackers.
When making payments, consumers simply hold the mobile device up to an NFC enabled POS system. They have to input an authentication code that varies depending on the specific mobile payment method being used. For instance, Android payments require fingerprint scanner while Apple Pay requires Touch ID. There are those that will require a PIN or security code. The authentication, processing of banking details, and completion of transaction usually take around 5 seconds. Again, the speed makes the transaction more secure.
How mobile payments can improve your business
This is the most important question that you probably want to be answered. According to reports, it is believed that mobile payments will reach up to $282 billion in sales by 2021. That is more than triple in growth and this is just in the U.S.
While this information seems promising, businesses would like to know what they can specifically do to improve business operations. Here are the benefits of integrating this into your business:
This is very important to consumers. A study shows that when customers feel like their data and finances are threatened, they will abandon the transaction. Fortunately, mobile payments address the common security issues of digital payments. Apart from the ones previously discussed (proximity and speed), the Apple or Android operating systems (two of the most popular mobile payment systems) do not store the banking information on the mobile device itself. It is stored in the app that remains secure even if the mobile device gets lost. When the data is entered by the consumers, the mobile payment app will encrypt the data and will generate a virtual account number. This will represent the actual banking account (e.g. credit or debit card). This makes fraud less likely to happen.
Since mobile payment transactions are completed faster (5 seconds compared to the 8-10 seconds for credit cards), it gives employees more time to accomplish something else. It helps make them more productive as they attend to the needs of customers. The sales per hour increases and with it, profitability is higher. Since transactions are shorter, the average waiting time of customers go down and that will increase customer satisfaction.
Mobile payments can also make data collection more efficient. These payments will help you analyze the purchasing behavior of your clients. This data can prove to be useful when you are looking for ways to improve your business, product, and customer service.
New business opportunities
This can be interpreted in so many ways. For one, the continuous improvements and advancements in technology will make it easier for you to keep up. Mobile payments may already contain the systems that will allow you to adapt to future developments and upgrades with minimal cost. Not only that, consumers who prefer mobile payment methods will most likely come to your business for convenience and security. Integrating this in your business processes will definitely keep your business competitive.
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