Mobile Pay: Should Your Business Offer Mobile Payments?


Consumers are increasingly pulling out their smartphones instead of their wallets to pay for things.

The recent introduction of Apple Pay—the “tap and go” mobile payment service offered on Apple’s new iPhone 6 models—has increased momentum for payments made via mobile device. About 220,000 stores, including McDonald’s, Macy’s and Petco, began offering Apple Pay to their customers right after the mobile pay service’s launch.

Meanwhile, Deloitte recently projected that in-store mobile payments would grow 1,000% globally in 2015, and BI Intelligence forecasts that mobile payments will see a compound annual growth rate of 172% over the next five years.

Given all the hype around mobile payments, should your small business start to offer a pay by mobile option to your customers? 

Some business owners may not feel ready to jump on the mobile payments bandwagon just yet. For one thing, offering a pay by mobile capability may come with an upfront cost. Most mobile payment services, including Apple Pay, require that a business’ point-of-sale (POS) system support near-field communication (NFC) chip technology—and many U.S. small businesses don't yet have that capability.  The startup costs for that are generally $300 to $500 per NFC reader, according to RetailWire.

Beyond the cost factors, though, there are several compelling reasons for small businesses to consider offering mobile payments to their customers. Here are a few:

Convenience for customers. More smartphone-carrying consumers will likely come to expect businesses to offer mobile pay options in coming years—especially as more businesses start offering them. Consumers will likely come to appreciate not having to carry their wallets everywhere they go and using their smartphones instead. Businesses that offer customers the convenience of using mobile pay sooner are likely to reap greater benefits from it than those who are late to the game.

Convenience for businesses. Mobile payment services tout that they’re faster than the typical credit card “swipe” transaction. While that’s debatable—and certainly depends on the payment service being used—customers who use an app rather than physical card readers may save the business time and extra hassle.

Payment security. At least some of the mobile payment services have added features that improve consumers’ payment security—perhaps making them even more secure than using a plastic credit or debit card. Apple Pay, for instance, uses a process called “tokenization” that replaces the actual credit card number with a special number for making payments, according to Apple Insider. This means that the credit card number never gets exposed during the transaction. It’s a win-win: Consumers can feel more confident their card number won’t get stolen while businesses can worry less about costly payment fraud.

Loyalty program and marketing opportunities. Businesses can leverage mobile payment technologies for more than just actual payments. They can combine it with their internal loyalty programs. In fact, some large companies are already doing this: Subway sandwich shops, for example, allows customers to pay with Softcard, a free mobile payment app. Through Softcard, Subway customers also receive coupons and other loyalty rewards.

While mobile payments are still a relatively new technology, it may not stay that way for long. It makes sense to explore whether a pay by mobile option is a good fit for your business before your competitors do first.

Kelly Spors is a freelance writer and editor based in Minneapolis. She previously worked as a staff reporter for The Wall Street Journal, covering small business and entrepreneurship.
All content provided herein is for educational purposes only. It is provided “as is” and neither the author, publisher nor Triad Digital Media, LLC d/b/a Triad Retail Media warrant the accuracy of the information provided, nor do they assume any responsibility for errors, omissions or contrary interpretation of the subject matter herein.

More Articles in This Category