Mobile payments can offer benefits like enhanced customer convenience, expedited accounts receivable processes, and increased cash flow. However, as payment technology evolves, mobile payment providers consolidate, and newer entrants to the space emerge, you may not know about some critical aspects of mobile payments that stand to impact your operations, risk and revenue. Here are just a few features of mobile payments that any business using them should know:
Pricing and fees aren’t one size fits all.
Though the transaction rates and fees mobile payments providers charge may be nominal (typically ranging from about 1 percent to 4 percent of the transaction amount) not all pricing structures are the same for each provider — and not all are appropriate for every business model. Some providers may require that merchants sign a contract for long-term service. Others may require that a merchant make a minimum amount of mobile payment transactions each month in order to qualify for the best transaction processing rates.
Further, transaction type may impact provider fees, too. Some mobile payment processers charge a higher fee for transactions that present greater risk, including “card not present” transactions made over the phone or online. Mobile payment transactions that are keyed in via manual entry to the mobile payment provider’s secure app may also involve higher processing fees compared to swiped transactions made with the dongle (a small device that plugs into the mobile device’s headphone jack).
Ultimately, whether the fees outweigh the revenue potential a business stands to gain from mobile payments is contingent on whether the mobile payment provider selected is the most appropriate for each specific business based on customer payment preferences, sales trends and current way of accepting payments.
They don’t absolve you of all security responsibility.
Most reputable mobile payment providers follow Payment Card Industry Data Security Standards (also called PCI Compliance). This set of standards essentially governs the minimum level of security payment providers follow when transmitting, processing and storing sensitive payment information.
PCI compliance isn’t “law” but using a PCI compliant payment processor may protect your business from undue risk. If a data or security breach were to occur, a business using a PCI compliant payment processor is better equipped to prove that due diligence was followed, should fines and/or lawsuits occur as a result of a data breach.
With that in mind, however, PCI compliance is just one aspect of mobile payment security. All businesses that allow mobile devices in the workplace should have well-defined and enforced “bring your own device” policies, and best practices for staff who use mobile devices and conduct mobile payment transactions. For example, though mobile payments allow for credit or debit card transaction processing anywhere, they should be used only with secure and password protected Wi-Fi connections. Many mobile payment providers equip merchants to transact in “offline” mode until a private connection is available, but your staff bears the responsibility to confirm such security.
The time it takes for you to get your cash varies.
Mobile payments can offer an expedited timeline for transforming customer payment into actual cash on hand, compared to the inefficient processes associated with driving to the bank to make cash and check deposits, and then waiting for those funds to become available for use. How quickly funds are electronically transferred to your business bank account following mobile payment transaction approval depends on the payment provider. In some cases, the funds may reach your account automatically in 24 hours. In others, you may have to initiate the transfer, and wait 72 hours or more for funds to reach your business bank account. When the deposit does arrive, it may be “less” any fees that the payment processor charged for the transaction, which can vary.
Mobile payments offer plenty of benefits to the customers and businesses who use them, but not all providers are created equal, and not all aspects of the technology is self-explanatory. Educate yourself on the procedures, policies and fees associated with various mobile payment providers to ensure you make an informed decision about the best way to incorporate mobile payments into your business model.