The Complete Guide to Mobile Payment Processing

From navigation to banking and shopping, many important business and consumer tasks today can be handled through smartphones (iPhones or Android) or tablets (iPads and others). Customer or merchant, life is made easy thanks to our nifty mobile devices.

This is particularly true for small and medium merchants. Mobile card readers became popular initially for SMBs. Those on the move, such as mobile dog groomers, market stall sellers, handy home service providers, and others, were able to see the value of mobile payment processing quickly.

As the market developed, solutions like Stax Pay’s mobile reader, Clover Go, and Swipe Simple’s Mobile Chip Reader became practical options for small business owners with physical locations that didn’t want the fuss of a full-frills POS system.

And with consumers increasingly expecting more convenient ways to shop, the mobile credit card reader has now shown its value in stores of every kind. With mobile payment devices, there’s no need for customers to come to the counter to process payments. Staff can meet them wherever they are and process their payments in real-time.

In 2021, the transaction value in the mobile POS payment segment is forecasted to hit US$2,466,606m, according to Statista. This figure will grow even more, as analysts are projecting the total amount to reach US$4,665,829m by 2025.

If you’re one of the many merchants going through due diligence to understand the value of and processes behind the mobile payment options, look no further. This post shares the key things you need to know about mobile payment processing.

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What is Mobile Credit Card Processing?

Mobile credit card processing pertains specifically to transactions that are processed through mobile technology. This encompasses transactions made from a mobile wallet, transactions processed via a mobile credit card reader, and other transactions processed from someone’s mobile phone, such as in-app purchases or transfers.

The conversation around mobile payment processing can get confusing when so many payment methods fall under this term. For merchants, this conversation is really about mobile card readers. But you need to understand the other technologies involved, to accurately weigh up what you and your customers need.

4 Types of Mobile Payments

Not all ways to pay through mobile will be relevant to all merchants, but you still need to be aware of the four primary types so you can understand what providers refer to and what you need.

Mobile credit card readers

When we talk about the mobile POS statistics above, this is what we’re referring to. This could be a mobile phone using an app that lets it process transactions or a piece of hardware that plugs into the phone to accept the transaction.

Mobile wallets

Any customer that uses their smartphone to make a contactless payment is using a mobile wallet. These are run through Samsung Pay, Apple Pay, Android Pay, Google Pay, and others to let customers complete transactions as they would with a credit card, without the card needing to be physically present (all they need is their mobile device).

Mobile eCommerce

Any transaction that is processed from someone’s mobile phone is considered mobile eCommerce. Say, for example, you have an eCommerce store. If a customer purchases from your online store using their mobile phone, that is considered mobile eCommerce processed through your virtual terminal. It doesn’t matter whether this transaction happens via an app or a webpage on their mobile. It’s all considered mobile eCommerce.

Venmo, PayPal, and other P2P mobile transactions

Less relevant to merchants but still within the mobile payment umbrella are peer-to-peer (P2P) transactions. Using Venmo or PayPal to pay back a friend or transfer money to a vendor at a pop-up store would all fall under the peer-to-peer category.

Mobile Wallets vs. Mobile Payments

Accepting mobile payments is just as important as being able to accept those payments with your mobile device. Hence, there’s sometimes some confusion between mobile wallets and mobile payments. Merchants know that both are needed, but sifting through data and information to figure out which is which can be nauseating. Let’s make it simple.

Mobile payments = mobile point of sale

Mobile payment solutions are the whole service that lets merchants accept card payments from a smart device. This includes:

  • Hardware: perhaps a card swiper or near field communication (NFC) reader that connects into a smart device or a Bluetooth-connected device that doesn’t need to be plugged.
  • Mobile payment app: all mobile payment solutions connect through an iOS or Android app to facilitate the processing solutions.
  • Software: within the app will be a suite of tools that give the service its functionality, such as invoicing, inventory management, loyalty programs, barcode solutions, and more, depending on the provider.

You can do everything you can from a traditional POS system through a mobile credit card terminal, as long as you have the right technology.

When you’re looking for mobile merchant services providers, look at their solutions with your payment types in mind. If you still have customers with magstripe cards, you will need a card swiper. If you have to read chip cards, you will need an EMV chip reader. These two payment types require hardware, while contactless payments can often be accepted with nothing more than a smart device and an app.

Mobile wallet = bank cards on mobile

Mobile wallets can connect with customers’ credit and debit cards to allow them to make credit card payments without needing the card to be physically present. Card information is stored in the mobile wallet, and merchants just need an NFC reader to be able to take these types of payments.

If you’re not sure if you can accept mobile wallets, just check if you can accept contactless payments with a physical credit card. If yes, your point of sale system has the near field communication technology to accept mobile wallet payments.

Through these wallets, the host (Samsung, Apple, Android, etc.) is connected with the card providers (Visa, Mastercard, etc.) to process the transactions. These are processed exactly as a credit or debit card would be. The payment processor will charge fees based on the type of card (credit or debit) at the same rate as if the card was present.

What to Look for in a Merchant Services Provider

Now we understand the difference between mobile wallets and mobile payments. If you’re planning to implement them, be sure to consider the following factors in your merchant services provider.

NFC reader

Contactless is largely becoming table stakes, and the use of mobile wallets is on the rise. Near-field communication is the technology that lets us tap those cards or phones. All small businesses, big businesses, and sizes in between should be taking contactless payments.

PCI compliance built into merchant accounts

Data security is serious business. A breach hits your credibility hard and can cause chaos for your customers. The merchant provider you use must comply with all PCI requirements. This includes a secure payment gateway for credit card processing and compliance regarding the storage of payment information such as transaction history and customers’ credit card and bank account details.

Affordable pricing

Payment processing fees and transaction fees still apply to mobile payments. Your costs will vary based on the type of card used, as well as the fee structure of your payment processor. The most cost-effective route for you will often depend on the size of your business, your sales volume, and what functionality you need.

As such, if you’re looking to minimize your mobile payment processing costs, look into providers that offer reasonable pricing and provide high-value products and services.

Strong customer support

The easier it is to contact support, the easier it is to get set up and settle issues. Look at provider reviews to make sure they are responsive, helpful, and have customer support solutions to solve your problems quickly and effectively.

Step-by-Step Guide for Implementing Mobile Processing Payments

Assuming you’re starting at the very beginning, implementing mobile payments will look roughly like so:

Make a list of your needs

Think of what types of payments you will be accepting and what kind of software you need in your business. For example:

  • Do you need to accept both EMV and NFC mobile payments?
  • What software solutions do you need? E.g., invoicing, inventory management, loyalty programs, recurring payments, or a virtual checkout.
  • How quickly do you need payments to reach your bank account?
  • What kind of sales volume will you process?
  • Do you expect to grow your business? Do you need a provider that can grow with you?

Choose a payment processor

The answers to the questions above will help inform your decision on which payment processing platform to select. When looking into credit card processors, evaluate the breadth of features they offer, the payment types they support, and their fee structure.

At Stax, we strive to provide everything you need to run and grow your business. In addition to supporting various payment methods and technologies (e.g., mobile payments, Text2Pay, ACH, etc.), our subscription pricing model allows you to have the best payment processing rates in the market.

Rather than charging a markup on your transactions, Stax simply bills you a flat subscription fee every month for all your payment processing needs. You get access to wholesale interchange rates and Stax won’t take a cut out of your sales.

Set up an account

Most merchant accounts can be set up quickly. Your processor should help you with the setup process and get your hardware (if you need it) shipped out as soon as possible, so you can start taking payments within the week.

Accept payments on your mobile

If you’ve got a reader able to handle all payment types, you’re ready to accept credit cards, debit cards, loyalty cards, and mobile wallets — all bases covered from a simple mobile solution.

Analyze and iterate accordingly

Analyze your transactions and get a sense of what sells and what doesn’t, as well as which types of transactions you process the most. With this information, you can be better informed to customize your offerings and adopt other payment processing technologies, should you need to.

Final Words

To effectively implement mobile payment processing, you need to have the right merchant services provider on your side. Choose a vendor that can equip you with the best technology and can facilitate payment processing in the most cost-efficient manner. It also helps to have a vendor that provides superb customer support and who has your back 24/7.

Stax meets all of that criteria and more. If you need a provider to power your mobile payment processing needs, get in touch with our team and we’ll walk you through the process.

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