Guest Post by Ms. Bekiroglu, editorial consultant for mobilepaymentgeek.com (learn more about Ms. Bekiroglu at the end of this post)
The rising popularity of smartphones and connected tablets has allowed mobile credit card processing providers to offer a range of new options for point of service or sales transactions. This level of flexibility is a considerable asset to independent contractors like plumbers and electricians, and also allows tradeshow vendors, and seasonal stand operators unprecedented freedom to take credit card purchases.
Many of these solutions allow cards to be swiped via an attachment that plugs into the audio jack of an iPhone, iPad, or Android device. Because the interface of these applications can be designed in such as way as to mimic the look and feel of a traditional terminal, the payment environment is non-threatening to the consumer and does not hamper their willingness to make an on-site payment regardless of the setting.
For merchants, the crucial point of evaluation in choosing a mobile transaction solution is security. Business owners must get a clear understanding of how the data they will be collecting will be encrypted and whether any of the card information is actually stored on the device. If it is, what protocols are in place to prevent thieves from accessing the information in the event the device is stolen or lost?
As with any other merchant service account, business owners will also need to assess the total cost of using a mobile solution. What are the transaction, gateway, and statement fees? Are there minimum and maximum monthly levels? This can be tricky to nail down precisely. The Square reader, for instance, has a limit of $1000 in payments accepted in any rolling seven-day period, which will result in a 30-day hold on funds transfers.
Other mobile solutions, like PayPal Here are attractive because the account offers a flat 2.7 percent fee with immediate availability of funds after a transaction. The money can be accessed via a PayPal debit card, which carries an added 1 percent cash back. Neither the app nor the reader has an attached fee. When compared to other merchant account options, however, a PayPal solution is not cost effective for sales of more than $2000 a month.
At their current level of evolution, all mobile payment options will be a trade-off between flexibility and affordability. If a business is wholly dependent on being able to process a payment in any setting, the fee structure becomes less a deciding factor. If, however, mobile payments are simply a luxury, the fee structure should be examined more closely.
Mobile payment options will only continue to expand over the next 18 months to two-years as chip-based credit cards make greater inroads in the United States. These cards, which offer single transaction data generation are already the standard in Europe because they are much more secure than the older, magnetic stripe cards.
The same near field technology that allows a chip-based card to work is now being integrated into the latest generation of smartphones. This will eliminate the need for a dongle, and basically allow money to be transferred between two NFC-enabled smartphones with a “wave” or a “tap.” Given these innovations, mobile transactions are one of the fastest expanding segments of the payment processing sector.
Guest Author: Ms. Bekiroglu is an author, freelance writer and editorial consultant for mobilepaymentgeek.com. After receiving a Bachelor of Arts degree from the University of South Florida, she became determined to eliminate her student loan debt, thus becoming very knowledgeable about money management. Now she seeks to educate others with tips in both personal and business finance.