A Primer on Simple Mobile Payments for Small Business: What Merchants Need to Know
When you’re serving customers, you need to be as fast and efficient as possible—no matter how big or small your business is. Your customers are busy and so are you.
Thankfully, with mobile payments from Stax, you can quickly accept and process payments from your customers. You’ll get paid right away and they’ll be satisfied with the transaction.
Learn all about mobile payments and why you may want to consider joining the Stax family to streamline payments and boost your small business’ productivity.
TL;DR
- Mobile payment processing means exchanging money through a mobile device such as a cell phone, smartwatch, or tablet. To stay competitive and make their customers’ lives as easy as possible, small business owners need to consider offering mobile payments as one of their payment options.
- There are five types of mobile payments small businesses can offer: NFC (near-field communications) payments, QR code payments, billing and invoicing apps, MST payments, and SMS payments. At the moment, contactless payments are more-or-less the safest mobile payment method—both for customers and businesses.
- Mobile payments are much more secure than cash and checks. With mobile payments from Stax, you will only have to pay an affordable subscription price, so you won’t get charged any extra transaction fees on top of what credit card companies charge.
What Is Mobile Payment Processing?
Mobile payment processing means exchanging money through a mobile device such as a cell phone, smartwatch, or tablet. For example, if a field services roofing technician visits a client to install shingles, when they’re done, they can send the customer a link in a text message to pay for the installation. A client could also go on their mobile phone and click a secure link in their messages and pay.
As the world goes cashless, more and more people and businesses are choosing to use mobile payments. According to Statista, in 2022, there were 2.8 billion mobile wallets in use by consumers worldwide. Another survey by Forbes conducted in August 2023, shows that 53% of Americans choose to use their digital wallets rather than make payments in other traditional ways. Moreover, almost half (47%) of those surveyed admitted that they spend more when using digital wallets compared to other forms of payment.
To stay competitive and make their customers’ lives as easy as possible, small business owners need to consider offering mobile payments as one of their payment options. It isn’t just for young people or startups; anyone with a mobile device can utilize mobile payment processing because it’s so simple.
What Types of Simple Mobile Payments are There?
Simple mobile payments give small businesses a great deal of flexibility. Taking payments on your mobile device allows you to sell your goods or services anywhere there’s an internet connection. As of 2023, there are five types of mobile payments small businesses can offer.
1. NFC (Near-field communication) payments
This is the most common way that a business can accept mobile payments from customers. It simply means that the business can accept payments using a mobile device such as an iPhone or Android device. NFC payments are very secure as any data that is exchanged during a transaction is always encrypted. The technology also uses RFID (radio-frequency identification), which makes simple mobile payments safer.
A business must have an NFC-enabled card reader so that contactless payments can take place between the mobile devices of customers and the card reader. In most cases, your payment software or point-of-sale (POS) will offer an app that allows you to take NFC payments from mobile wallets like Apple Pay, Samsung Pay or Google Pay.
A mobile wallet is a virtual wallet that links to a customer’s credit or debit card, or stores their bank information on the mobile device. To make a payment, the customer opens the app on their mobile device and taps the device on a POS terminal or card reader, and voila—money is transferred from the customer’s account to the business.
With an attached mobile card reader, you’ll also be able to accept standard plastic credit card payments from American Express, Discover, and more.
2. QR (Quick Response) code payments
A QR code is a square, tetris-like box that appears in black and white. One way that QR codes are used to make mobile payments is when a customer scans a merchant’s QR code with their mobile device camera. Usually, the mobile device needs to have an app that can decode the QR code once it has been scanned. Once decoded, a link appears on the customer’s device that they can click on and open to complete the payment.
What makes this method so convenient for a brick-and-mortar business is that they can print out the QR codes on paper and hang them up near their POS terminals. Customers can then scan the code and make payments quickly leading to shorter queues at checkout and with minimal interaction with the cashier.
Another way to use QR codes is to have the QR code on the customer’s mobile device that the merchant can scan with their card reader. In this case, the customer needs to have a mobile payment app on their device that allows the customer’s card or bank account details to be embedded in a QR code. When the code is scanned by a merchant, the payment is completed.
3. Billing and invoicing apps
Some payment providers allow you to invoice from a mobile app like Square and Paypal, so you can send invoices on the go or at the job site. This is especially handy for individual contractors such as handymen, repairmen, technicians, and maintenance workers. After completing a job, they can generate an invoice using an app on their mobile device and send it to a customer via email or a messaging app. The customer can then complete the payment using any one of the payment methods accepted by the merchant.
4. MST (Magnetic Secure Transmission) payments
This is a new technology that is currently only available on Samsung (hence only Android) devices. This technology uses magnetic signals to connect a mobile device with a nearby POS terminal. These signals emulate the magnetic strip on physical credit cards to make a payment. As of now, MST payments do work on NFC-enabled terminals.
5. SMS payments
Text-to-pay is becoming more popular as well. This option allows you to send the customer a payment link via text message. They can then use the secure link and complete the payment on their mobile device.
How Does the Simple Mobile Payment Process Work?
The mobile payment process works a bit differently for each type of mobile payment.
At the moment, contactless payments are more-or-less the safest of the mobile payment methods for both the customer and the business at the moment. This is because a customer’s payment information isn’t passed along in plain numbers. Rather, it’s tokenized as a random string of characters.
This token is transmitted via NFC to your payment gateway attached to your POS system. The business’ payment gateway then passes that token off to the payment processor in real time—never handling the customer’s card information at all. The payment processor then checks the token’s validity and authorizes the payment to go through.
Once the transaction is approved, authorization is sent back to the merchant and the transaction is completed. The payment processor will send the funds to your bank account within a few days.
Taking credit card payments on your mobile device at checkout is nearly identical to the method of running credit card transactions at your stationary point-of-sale system. In this case, you’ll have your payment service’s app running and run their card through a credit card reader that speaks to the app typically via Bluetooth. From there, everything runs as it would from the stationary system.
Finally, for QR code payments and text-to-pay, your payment system will generate a link to online payment for the customer in the appropriate format. You will be able to generate the link from either your system’s mobile app or desktop software.
Paper-Based Payments vs. Mobile Payments
You’re using traditional payment methods such as cash, checks, and credit and debit cards. Perhaps you haven’t considered adding mobile payments into the mix. However, it can have a positive impact on your business if you do.
Why? You’re giving customers more options and providing them with an easy, convenient, and secure way to pay. They probably don’t like writing checks or carrying cash, which is risky. You’ll be able to expand your client base to people who prefer mobile payments just by downloading the Stax iOS or Android app in a matter of minutes.
This will directly lead to an increase in sales volume and revenues. As mentioned earlier, a survey showed that customers spend more when using their digital wallets, so it can only be beneficial to your business if you can tap into this customer base. Plus, you’ll get paid on the spot, as opposed to waiting for a check to clear.
In this fast-paced world, paying by cash or writing a check at a point-of-sale (POS) can seem tedious to many. Simple mobile payments are quick, where a customer needs to tap their smartphone or any other mobile device on a card reader or a payment terminal, and the payment is completed in seconds.
They don’t have to provide their signature, type in a PIN, dig through their purses or pockets for a pen to write a check, or unearth cash. This not only improves customer service but also frees up your staff to attend to more customers. If your staff is equipped with mobile card readers, then they will be able to accept simple mobile payments anywhere in your store.
Let’s say you only accept cash or checks. One of your employees then loses your customer’s check or cash before you can safely deposit it. What next? You don’t want to look unprofessional to your customer, but you also need to get paid. Stax can save you from that headache with less room for error.
Additionally, if you’re accepting debit and credit cards, those processing fees can eat into your profits. Why spend more money on payment processing than you have to?
Keep in mind that you do not need to eliminate cash, checks, and debit and credit cards altogether. Customers who aren’t well versed in mobile payments may not know how to use them or they could be skeptical of them and unwilling to change their mind. You could always give them the ability to pay with more traditional methods, too. If checks are the standard form of payment for your business or industry, here’s some good news: Stax has an electronic ACH processing feature for easy collection.
How Secure Are Mobile Payments?
Mobile payments are much more secure than cash and checks. Your employees can lose cash or checks, or a check can bounce. And though it may rarely happen, cash can be counterfeit as well.
Hackers can also steal customers’ information when they swipe their debit and credit cards on an in-person device. With mobile payments, customers’ financial information is encrypted so that hackers cannot see it.
Essentially, when a payment is sent, the customer data is scrambled and hackers are unable to decipher what it means. Hence, there is much less of a chance of your customers’ information being stolen.
Using platforms that carry the highest level of security is critical. No matter how and where they collect payments, every single business using Stax is protected with the highest level of PCI security standards.
Of course, no system is perfect. You should still take the necessary precautions to protect your mobile devices, like placing a secure password on them that only certain employees know. Another good idea is to change your passwords periodically and to ensure that employees who are no longer with your company cannot access your mobile payments processing system anymore.
Company cell phones and other mobile devices should only be utilized for business and not personal use like browsing websites or going on social media. If employees browse the web while working, they could stumble upon a website that installs malware on the device. You should provide your employees with best practices for using your devices, such as never clicking on suspicious links or emails from unknown senders. Keeping your mobile devices updated and using anti-virus software can also provide advanced protection.
The Costs of Mobile Payments
When you take traditional payment methods like checks and cash, you have to spend time and money going to a bank and depositing them. If you accept credit cards, you will have to pay a processing fee of around 1.3% to 3.4%, along with the payment processor’s fees.
However, with mobile payments from Stax, you will only have to pay an affordable subscription price. When it comes to processing, you won’t get charged any extra transaction fees on top of what the credit card companies charge. You will save big, especially as you scale up and grow. The more you process, the greater the chance you’ll have of a higher return on investment even with the credit card processing fees. With Stax, you’ll have direct access to the true rates.
The easy-to-understand Stax model won’t hit you with any hidden fees. You won’t have to worry about paying multiple vendors since you can process and manage all your mobile payments in one place. You will always know exactly what you are paying for and why. Accepting payments of all types from digital payments to in-store payments has never been easier.
What You’ll Need To Start Taking Mobile Payments
First and foremost, you’ll need one or more mobile devices with internet access. You’ll also need a payment service provider. If you’re planning on taking credit card payments, you’ll also need to get a mobile credit card reader. Once you’ve got all three of those items, you’ll set up your payment methods following your payment provider’s instructions.
You shouldn’t stop there, though. Once you’re able to take mobile payments, be sure to let your customers know this is an option. You can post a sign at your storefront or send your customers an email. You should also make sure your employees are mentioning it as an option at checkout.
Tips for Choosing a Payment Provider
Choosing a payment provider can be intimidating for small business owners. Here are some tips to help you out:
- Take the time to understand your needs. Write out your must-haves and your wants. Keep these front and center while researching options.
- Make sure you understand the fee structure of each provider you’re vetting. Many have hidden fees and make it difficult to know what their price tag really is until you’ve already signed up.
- Find out if the providers you’re looking at integrate with your tech stack. If they don’t have a pre-existing integration, some providers may be able to build one for you.
- Do consider whether the provider is flexible enough to scale with you over time. You may be a small business now, but that may not always be the case. You don’t want to be stuck dealing with cumbersome workarounds once you outgrow your system.
- Read the provider’s reviews on third party websites and ask to speak to references. Doing your due diligence now will save on pain later.
Signing Up for Stax
You can easily sign up for Stax today. All you have to do is contact Stax to speak with a Payments Consultant. Stax not only provides secure, affordable, and contactless mobile payment processing; it also offers companies an all-in-one platform of scalable business tech to manage invoicing, financials, sales data, inventory, and customers.
Stax provides our customers with a real and clear view of their finances so they can make better decisions for their business. Once you sign up, you’ll be empowered to grow and ensure your business is a success, one mobile payment at a time.
FAQs about Mobile Payments for Small Business
Q: What is mobile payment processing?
Mobile payment processing involves the transfer of funds facilitated via mobile devices like smartphones, smartwatches, or tablets. It provides quick, secure, and convenient options for customers to pay for goods or services. Examples of mobile payment processing methods include text-to-pay and secure link payment.
Q: Who can use mobile payment processing options?
Any individual or business with a mobile device can make use of mobile payment processing. As the world transitions towards cashless transactions, both consumers and companies, regardless of their size or nature, are opting for mobile payments. Offering mobile payments can keep businesses competitive, simplify payment processes, and improve customer satisfaction.
Q: What types of mobile payments can a small business offer?
Small businesses can offer various mobile payment options. These include near-field communication (NFC) payments through mobile wallets (Apple Pay, Google Pay, Samsung Pay), standard credit card payments, QR code payments, invoice payments from mobile apps, and text-to-pay options.
Q: How secure are mobile payments?
Mobile payments are considered more secure than traditional payment methods. Customers’ financial information is encrypted in mobile transactions, making it difficult for hackers to gain access. Reputable payment platforms like Stax ensure robust protection by adhering to the highest level of PCI security standards.
Q: What is the cost of mobile payments for small businesses?
Though there are costs associated with accepting mobile payments, they can be more cost-effective when factoring in the time-saving aspect and the cost of other payment methods. With a platform like Stax, businesses are charged an affordable subscription price, with no hidden fees.
Q: What does a small business need to start accepting mobile payments?
To start accepting mobile payments, a business needs one or more mobile devices with internet access, a reliable payment service provider, and possibly a mobile credit card reader. Once set up, the business should make sure to notify their customers about the new payment option.
Q: What should one consider when choosing a mobile payment provider?
When selecting a mobile payment provider, businesses should consider their needs, the provider’s fee structure, the ability to integrate with existing technologies, the provider’s adaptability to business growth, and reviews from other clients. Stax could be an excellent option as it provides secure, affordable, and user-friendly mobile payment processing, which integrates well with other business technologies.
Q: How does mobile payment processing benefit small businesses?
Mobile payment processing can have several benefits for small businesses. It can streamline the payment process, provide flexibility and convenience, increase customer satisfaction, secure customer data, save time, and potentially reduce costs. Additionally, it allows the business to accept payments from a broader range of customers, extending its market reach.
Q: Can a business still accept traditional payment methods while offering mobile payments?
Yes, businesses do not have to eliminate traditional payment methods like cash, check, or cards when they start accepting mobile payments. Offering multiple payment options caters to a wider range of customer preferences and increases the likelihood of sales.
Q: Does Stax have features beyond mobile payment processing?
Yes, in addition to offering mobile payment processing, Stax also provides an all-in-one platform for managing invoicing, financials, sales data, inventory, and customer data. Therefore, businesses can handle all their mobile payments and other related tasks in one place.