Mobile payments have become practical tools amid the pandemic. Should your business adopt a mobile payment technology? Find out here.
There’s a good reason why more and more businesses are adopting mobile payments. People are prioritizing health and safety these days, making contactless payment methods practical options.
And the best part about these mobile payment technologies is that they also help improve customer satisfaction. In effect, businesses can enjoy increased sales and brand loyalty.
If you’re wondering whether mobile payment is right for your retail business, you’ve come to the right place. Read on as we discuss everything you need to know about mobile payments.
What are Mobile Payments?
Generally, mobile payments are payment services done with a mobile device. Instead of using credit cards, cash, or cheque, your customers can pay for your goods and services using their smartphones or tablets.
The interesting part is that businesses can leverage different types of mobile payments. When done right, these digital payment methods can significantly transform the customer experience, boosting business results.
Types of Mobile Payments
Two of the most popular mobile payment methods are NFC payments and mobile wallets. Other enterprises are also utilizing other forms of contactless payment, ranging from sound waves to QR codes. Below’s a list of contactless payments your business can start using:
NFC payments utilize near field communication (NFC) technology to exchange encrypted data between payment and reader devices that are close together. Popular examples of NFC-driven payments are Google Pay and Apple Pay.
Digital or mobile wallets typically store payment information in a mobile app. They store credit and debit cards, coupons, and tickets securely and communicate with terminals using various technologies.
Sound Waves-Based Payments
This type of mobile payment uses unique sound waves that transmit secured and encrypted data even without the internet. A user can complete payment by downloading a sound-based payments app and bringing the phone close to the merchant device.
A Magnetic Secure Transmission (MST) payment technology supports contactless payments through magnetic signals. These magnetic signals allow smartphones to share data with a terminal’s credit card reader.
Many payment and banking apps are now using Quick Response (QR) codes to process transactions. This mobile payment works by scanning a QR code and connecting the card details through an app.
Also called ‘pay by link,’ this mobile payment refers to a link or button sent to an email, social media, messaging app, or SMS. Users can complete a transaction by opening the link and entering their credit card details.
Mobile Bank Transfer
Banks offer mobile banking services through which customers can make financial transactions straight from their bank account. Users typically use this payment solution for peer-to-peer transfers, although they can also utilize this for other payments through an app.
With this type of mobile payment, users submit relevant information via text message to the corresponding payee phone number. The amount will then reflect on the user’s mobile phone bill, payable to the service provider.
Benefits of Mobile Payment for Retail Businesses
Should you adopt a mobile payment technology for your business? Here are five reasons why you should consider doing so:
1. Faster Transaction
Many customers find contactless payments quicker and more convenient than credit cards. Customers are likely to come back to your store if they experience faster checkouts and shorter queues.
Statistics reveal that the Asia Pacific region records the highest mobile payment usage rate, most notably in China and Thailand. With mobile payment’s quicker turnaround and convenience, it makes sense why many countries are gradually switching to a cashless society.
2. Improved Security
While there are obvious advantages to using mobile payment, there are still concerns about its security. Service providers are taking steps to ensure contactless payments will protect consumer data, recognizing the security risks.
For instance, Apple Pay uses tokenization, keeping data inaccessible to vendors through encryption. Other companies, meanwhile, are integrating fingerprint ID or multi-factor authentication into their apps for improved security.
3. Reduced Costs
According to PaymentSource, it is more costly to do business in cash. Enterprises need to consider the costs for storing, securing, transferring, and processing money in the bank.
On the other hand, mobile payment services offer advantages for mitigating expenses and removing some system costs. For example, mobile wallets can utilize a store-branded card base to save on interchange fees.
4. Increased Sales
Providing a mobile payment option allows cash-only businesses to accept credit card payments. With a new payment stream, small enterprises, such as food trucks, can grow their customer base and boost sales as a result.
Even better, most mobile payment providers take smaller cuts per transaction than credit card firms. Put simply, businesses can reduce costs while earning more.
5. Enhanced User Experience
Unprecedented times like the COVID-19 pandemic push people to adopt new lifestyle habits and technologies. It’s pretty obvious why people are ready to go contactless when it comes to payments.
It is a convenient solution and a suitable option given today’s health and safety concerns. The quicker checkout, extra convenience, and safety and security that mobile payments provide contribute to an enhanced customer experience.
6. Customer Loyalty
For businesses, it’s not only important to acquire customers but to retain customers as well. A report from Bain & Co reveals that consumers “spend more than twice as much through digital channels and tend to shop more often if they use mobile payments.”
Once customers sign up for mobile payments, retailers can also send more relevant communications and offers for enhanced engagement. What’s more, mobile payment rewards can encourage increased store visits.
What are the Disadvantages?
While mobile payments come with promising advantages, it’s also important to note their drawbacks. Data breaches remain a major concern for many enterprises, although service providers are already taking measures to address such risks.
Also, mobile payment apps treat devices differently. This is why it’s crucial to inform your customers which mobile payments your store accepts before proceeding with a transaction.
Summing up, mobile payments come with incredible benefits, which your business can leverage, particularly for enhancing the customer experience. Given the unpredictability of times, there’s also no doubt that mobile payments will play a significant role in consumers’ future.
You must educate yourself about its advantages and disadvantages and weigh its pros and cons for your business. Then, take essential steps to upgrade your technology solutions if you deem it necessary for your business growth.
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