If you’ve visited a mall, high-end department store or even a farmer’s market lately, you’ve likely encountered a merchant who accepts mobile payments, allowing customers to transact via a tablet or smartphone. But, increasing evidence suggests that mobile payments have moved past the point of being a “nice to have” payment tool for customer convenience, and become a vital “must have” for small-business merchants. Here’s why:
Mobile payments optimize existing tools. The 2013 National Small Business Association Technology Survey revealed that 74 percent of small-business owners now utilize a smartphone to run their business. Just as smartphones and tablets have become a cost-effective medium for entrepreneurs who wish to remain connected to business at anytime, and from anywhere, mobile payment processors similarly equip business owners to stay competitive, while managing infrastructure costs. With mobile payments, business owners can skip the fixed point of sale terminal that was once required to accept secure customer payments. In fact, many of today’s mobile payment processors require no upfront investment in order for business owners to leverage their existing mobile devices to process secure customer payments by credit or debit card. Because mobile payment transactions also allow for receipts to be sent to customers via text or email, paper receipts (and the costs associated with producing them and managing them securely) can be eliminated, too.
Customer expectations are increasingly demanding. Though the digital world has lowered the barriers to entry for small businesses, in many ways the nearly instantaneous nature of an always-connected society that equips consumers to find information and make purchases from their mobile devices has raised expectations about what a quality customer experience entails. In addition to consumer’s expectations that merchants of all shapes and sizes meet their needs at any given time — including displaying real-time inventory stock levels, on-demand tracking information and the ability to connect with customer service reps instantly via live chat — traditional checkout lines have become an inconvenience. To remain competitive, businesses of all sizes must find creative ways to better the experience. In fact, in its “Top 10 Strategic Predictions for 2015 and Beyond” report, Gartner Research predicts that 50 percent of consumer product investments that are traditionally made by businesses will be redirected to customer experience innovations, by 2017.
Though your small business may not have the innovation budget of a large corporation, mobile payments can serve as a means to compete. Because both smartphone and tablet devices can be equipped to accept secure customer payments in a matter of minutes, anyone on your team can process customer payment from any sales floor location, over the phone, or offsite.
Mobile payments can overcome cash flow hurdles. The U.S. Small Business Administration cites cash flow challenges as the reason half of all small businesses fail. Such financial constraints arise, in part, by the inherent cost and inefficiency traditional invoicing processes present — including expenses related to preparing, printing and mailing paper invoices, the opportunity cost associated with waiting for client payment that could delay investments in bettering business operations and the risk that clients don’t pay as agreed. Mobile payments empower small-business owners to collect customer payments as soon as work is complete. Funds for approved transactions are subsequently electronically transferred to a business bank account (excluding the mobile payment processor’s fees), typically within 48 to 72 hours.
The public is increasingly adapting to mobile payments. A recent study of 1,000 consumers conducted by PunchTab revealed that about 25 percent of respondents have used some form of mobile payment app to transact thus far. Though that number indicates that mobile payments aren’t yet the preferred form of payment among American consumers, Gartner Research predicts that mobile payment adoption rates will catch on quickly, estimating an annual volume and value increase that will average a 35 percent growth rate, until 2017. At that time, the research group forecasts that the mobile payment market will include more than 450 million global users, and that mobile payment transaction volume will be more than $72 billion.