Money is always evolving. Debit and credit cards were the last major currency innovations, and now a new one is emerging fast: mobile payments. It makes sense, as smartphones have become integrated in all aspects of the average person’s life.
Today, coins and bills are quickly being replaced by digital transactions. In fact, the phenomenon has already swept China in a major way. According to The New York Times, even some tech-savvy street musicians in Shanghai have placed QR codes on signs, allowing people passing by to tip directly from their smartphones.
There’s no denying that the world is going digital on a major scale. Today’s consumers are more than happy to ditch their hard cash in favor of smartphone convenience and security, so it’s important that businesses keep up to meet the rapidly growing demand for mobile payment gateways.
How Common Are Mobile Payments?
We’re still in the early days of paperless currency. However, a 2016 Business Insider estimate anticipates that the volume of mobile payments will grow to a staggering $503 billion by the year 2020, with 56 percent of the consumer population utilizing the technology by that time.
Countries such as Sweden, Singapore, the Netherlands, France, Canada, Belgium and the U.K. are leading the way, and it’s not unreasonable to assume that the U.S. will follow suit. Let’s take a look at some of the most common current mobile payment options, as well as what we can expect from the future.
Mobile Devices as POS Systems
Many of today’s merchants are taking advantage of mobile technology to process payments. A tablet or even a smartphone is more convenient than a large cash register or computer, allowing small businesses to streamline their setup significantly.
This is one of the mobile technologies still being developed and perfected, but quickly coming to fruition. It’s essentially a “tap-and-go” option that makes it possible for consumers to simply touch their smartphone to the terminal, and then the money is withdrawn via an app.
Mobile Payment Platforms
Companies such as PayPal or venom make it possible for you to transfer money through their peer-to-peer mobile platforms. This concept is the most common form of mobile payments, and the services are becoming faster and more efficient.
Closed Loop Payments
Many of today’s larger companies – and even some smaller ones too – are implementing their own apps with integrated payment features. For example, Starbucks has an app that allows you to order and pay in advance, and earn rewards in the process.
Direct Carrier Billing
This mobile payment option has been made popular by apps and mobile games that allow users to buy digital products by adding the charge to their monthly phone bills.
Why Are Mobile Payments on the Rise?
There are quite a few reasons why both consumers and merchants are excited about mobile payments:
In a cashless society, everything moves faster and more efficiently. Instead of waiting in line while the person ahead of you counts out their change, you can anticipate a rapidly moving queue. That means customers can get in and out without hassle, and businesses can meet the demands of a higher volume of customers.
As an added benefit to both merchants and consumers, people are much more likely to make small impulse purchases with mobile payments. Most people don’t want to break a large bill or use a card just to buy a coffee.
However, mobile payments remove the stigma associated with impulse buying. Now, people can feel comfortable buying just one tiny item, rather than adding it as an afterthought.
One of the most appealing aspects of a cashless society is that people don’t need to carry around cumbersome wallets or purses. Smartphone payment apps allow you to store all of your financial data in one place, including gift cards, rewards programs, and coupons.
Virtually everyone has lost cash at one point or another. If you lose your phone, you can simply freeze or cancel your accounts, and recover your data on a new mobile device. Transactions are thoroughly encrypted, so identity theft is a much lower risk.
Lower Processing Fees
Consumers no longer need to pay hefty ATM fees whenever they take out cash or accidentally overdraw an account. Merchant fees tend to be quite a bit lower as well, not to mention the drastic reduction of hardware and upkeep.
One of the most exciting developments is that going cashless puts the entire world at your fingertips. Gone is the need to spend time and money exchanging currencies. There are plenty of payment processors that facilitate seamless transactions between hundreds of countries.
Customer and Merchant Protection
Mobile payments make it easy to refund an unsatisfied customer. They also protect merchants from chargebacks. Cash transactions often require receipts, and records are often not available. Mobile payments leave a clear trail so appropriate recourse actions can be taken when necessary.
The Future Is Now
Mobile payments are here to stay, and now is the time to get on board – especially for businesses. Accepting mobile payments boosts growth and profitability, according to Forbes. Staying current with the latest technology is essential to the short and long-term success of any business, and it’s clear that mobile payments are a big one to watch.
Fortunately, if you’ve already upgraded your POS system to accept EMV chip cards, there’s a strong chance that you can accept mobile wallets too. Using a tablet as a POS system is another easy and cost-efficient way to join the mobile revolution. Do some research. Talk to a reputable payment gateway company, and gain the competitive edge with mobile processing.
Author Bio: Arthur Jones is a financial consultant and entrepreneur from Long Island, NY. He enjoys helping today’s small businesses to grow, and his current focus is on showing how the right global payment gateway can drastically expand a merchant’s customer base.