Digital payment methods continue evolving with every new technology introduced, and the hottest trend today is mobile pay. The idea of using your mobile phone to make payments is especially attractive to today's connected consumers.
But what is mobile pay, and is your business ready for it?
Today we'll talk about mobile payment solutions and why you need to offer them to your customers. We'll also talk about how you can quickly implement this in your retail store or restaurant.
Mobile pay, or mobile payment systems, is a general term that describes purchase transactions that you make using your mobile phone. It’s an alternative payment system to cash that’s similar to a credit card in that there's payment technology behind it.
Mobile payment systems are digital technology that builds upon existing payment methods like a credit card. In fact, this method is often used as an extension of credit card payments. Some credit card networks like Visa, for example, allow you to make card payments using your mobile phone, without having to use your physical card during a transaction. Banks also allow you to use cash mobile payments through solutions like PayPal and Venmo to digitally withdraw from your account to pay for purchases.
Mobile payment devices and technology are flexible in that they can be used in both peer-to-peer or pay-to-business models.
Peer-to-peer mobile payments allow you to send money from your mobile phone to another. For example, you can pay your friend your share of the rent via mobile pay, or you can use it to purchase items informally online by sending money straight to the seller. To send peer-to-peer payments, you and the recipient need to have compatible mobile payment devices. This payment type is simple to set up since you don't need any additional devices or peripherals.
If you’re a business, you can receive mobile pay transactions using the pay-to-business model. This is how, for example, you can use your mobile phone to shop at retail stores or dine at a restaurant. For this, you would need mobile payment solutions , such as Apple Pay or Samsung Pay, supported on your payment devices.
If you’re wondering "how do mobile payment systems work?" and the different types of mobile payment systems, you should first know that a mobile wallet is at the heart of it all. Much like your physical wallet, a mobile wallet is an app or website used to hold your funds. This includes the money on your cards that are used whenever you make mobile payments.
All of the major smartphone players have their own mobile wallet systems. Examples include Apple Pay for iOS users, Google Pay for Android users, and Samsung Pay for Samsung smartphones. You also have other third-party digital wallets available, but the first three are the most common. If you’re looking to accept mobile payment solutions in your business, make sure your payment solution is able to accept these three.
Much like a physical wallet, you need to deposit funds into your mobile wallet before you can start using it to pay for goods and services. You can do this via bank transfers or by adding funds with your credit card, as you do with PayPal. Alternatively, you can link your credit card directly to your wallet so that it gets charged whenever you use mobile pay. An example of this is Apple Pay, where you can sync and use your credit card details to pay for items.
All payment transactions, from receiving to sending, are handled using the mobile wallet app. That’s why it’s vitally important that you choose a trusted and secure mobile wallet provider when choosing the best mobile payment system for your consumers.
In practice, mobile payment systems are straightforward. For peer-to-peer payments, you simply need to know the details of your recipient and set the amount you intend to pay that person. With Apple Pay, for example, it’s as simple as opening the relevant conversation in the Messages app and using the Apple Pay button to send money to that person.
To make a purchase using pay-to-business payments, you need to specify the amount you want to send using your mobile wallet app. You then hold your smartphone close (2 inches or less) to the terminal. Within seconds, your payment will be sent, and the transaction is completed.
Mobile payments use NFC, or near field communication technology. This is a contactless technology that uses radio waves to send small bursts of data quickly and easily.
When the mobile phone is tapped near the reader terminal, it initiates a conversation between the two. Data is exchanged between them using radio waves until the payment process is complete. All of this happens in a fraction of a second. In fact, speed is one of the best features of NFC payments over Europay, Mastercard, Visa (EMV) chips or magnetic stripes.
NFC also encrypts the data being transmitted, making mobile payments a much more secure method over credit cards.
With different payment methods available to you, such as cash or credit cards, you might wonder “why even bother with mobile pay?” In fact, one technology, EMV chips, have already been touted as the next big step for credit card payments.
But the fact is that mobile payment systems offer significant advantages over other payment methods currently available. Here are some reasons why:
Security is one of the significant advantages of mobile payments, mainly when used with NFC technology. In fact, when combined with other security features already present in mobile payment devices, NFC offers a significant improvement over EMV chips.
One key aspect that makes NFC payments so attractive is tokenization. This is an encryption method that scrambles the credit card information data while being transmitted and stored. Your bank does this with a unique process and then sends it to your Apple Pay wallet for storage.
If hackers were to steal this data, all they would get is useless, meaningless gibberish. This data is also dynamic, which makes it impossible for thieves to try and decipher it.
Most mobile wallets also have layers of security to ensure that you’re the one who’s making a transaction. For example, Apple Pay requires that you provide your fingerprint scan using Touch ID and facial recognition whenever you make payments. Since it’s impossible to replicate your fingerprint, thieves can’t access your mobile wallet even if they steal your mobile phone.
Then there’s the fact that using NFC contactless payments require that you’re physically present to make the transaction or if you are ordering online using a mobile wallet, facial recognition is required adding that additional level of security.
Speed is one of the best features of mobile payments using NFC, and it’s light years ahead of magnetic stripes or even EMV chips. That’s significant because EMV chips are already a substantial improvement over previous payment technologies.
NFC allows you to easily tap and pay in fractions of a second. In retail stores or restaurants where there’s a large volume of transactions, this is an especially handy mobile POS solution that speeds up your turnover, therefore increasing your sales.
Using mobile pay is not just convenient for you as a business, but also for your customers.
Mobile POS devices are well suited for card and mobile payments. And for people who have multiple credit cards, mobile wallets provide a convenient way to consolidate them into one payment system.
Most people nowadays already have their phones at their side at all times, so mobile pay essentially becomes a payment method that’s available 24/7. As long as they have the newer smartphones, mobile payment is built into them.
It’s also much easier to send payments to other people straight to their phone, as opposed to having to withdraw funds from an ATM and then sending those to a recipient physically.
If you’re interested in offering mobile payments for your business, you need business POS software that can support this feature. Choose a point of sale system, like Revel Systems®, that has the right hardware and payments technology that will save you time and money.
Revel Systems POS can seamlessly integrate with a variety of mobile payment systems.
The Revel POS not only has its own payment processing solution, Revel Advantage, but also supports a wide variety of payment processors for easy acceptance of flexible payment methods.
Ready to support mobile payments solutions in your business? Schedule a free demo with us today and see how our mobile point of sale devices and mobile pos solutions can make a difference for you.