With fewer Americans carrying cash in their wallets and more businesses not accepting credit cards, the new age of mobile payments is becoming increasingly common. In fact, 26 million United States small businesses are not accepting credit cards. But mobile payment keeps them alive and competitive as tech companies come to the rescue.
What Is Mobile Payment?
Mobile payments can be anything from an app to a piece of equipment that scans credit cards and attaches to a smartphone. The idea behind the concept is for individuals to pay for services without needing cash or a credit card processing terminal.
The mobile payment concept is catching on quick. According to USA Today, U.S. mobile transactions are expected to reach $86.1 billion, doubling the $48.9 billion in revenue seen in 2010. In addition, worldwide mobile payment users increased 40% from 2010 to 2011.
Mobile Payment Vendors
Square™ has become one of the most widely used mobile payment options. In 2011, 800,000 merchants accepted $2 billion in payments using Square. The company charges a standard rate of 2.75% for each credit card swipe, and the payments deposit automatically the following day.
A Seattle-based bike shop, Hello Bicycles™, started accepting Square payments after being a cash-only merchant. The result: Business earnings tripled in one year. In addition, Hello Bicycles enjoy being a part of an eco-friendly, paperless payment system. After Houston Urban Therapy™ began using Square, they saw a 10% increase in clients in approximately three months of using the device.
And it is not just small businesses using Square to accept payments. The Salvation Army used the payment method in 10 city locations during the 2011 holiday season. Bell ringers not only carried buckets for coins but also smartphones with the Square device in order to receive donations. The money raised went directly into the Salvation Army accounts.
PayPal On the Go™ is another mobile payment service that provides the same benefits and ease of use that one finds with the online site. PayPal on the Go promotes itself not only as a way to pay for services from business but also an easy way to reimburse a friend for lunch or pay for an eBay item. PayPal on the Go is available as a free downloadable app for iPhone, BlackBerry, and Android phones. Nokia also offers a mobile application.
Intuit Go Payment™ is a mobile payment service that also provides customer follow-up services. The company does not charge a monthly fee, and a vendor can pay as little as 2.7% per credit card transaction. In addition to payment, Intuit’s program allows vendors to email and text receipts to their customers. The receipts have the option of including the company logo and a “forward to a friend” tool. GoPayment also syncs directly with QuickBooks™ software for business management.
On the Horizon
Realizing the growing popularity and money-making potential in mobile payments, other companies are quickly working to develop alternate payment solutions. American Express is developing a platform to allow AmEx users to pay via mobile phone to AmEx-receiving vendors. Bank of America, Chase, and Wells Fargo are together developing ClearXchange, a platform that will allow payments using an email address or mobile phone number. Visa will soon roll out V.me by Visa, a product to help consumers make mobile payments.
Last September, Google rolled out Google Wallet™, which is being touted as a “one-tap payment” source and will include a customer loyalty program and will offer discounted purchases with their affiliate companies like Jamba Juice, Foot Locker, and The Gap. A unique aspect of Google Wallet is its use of Near Field Communication (NFC) wireless technology and the plan to eventually embed NFC chips inside smartphones. This feature is unique to Google and one that Square does not utilize.
The future of mobile payment is already here. And with so many businesses taking part in this technology, it is likely that the mobile phone will eventually become more desirable than cold, hard cash.*The company, product and service names used in this article are for identification purposes only. All trademarks and registered trademarks are the property of their respective owners.