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Taking the Leap into Mobile Payments

You may think accepting electronic payments at your small business gives consumers plenty of payment options. And, until very recently, accepting debit cards, credit cards and good old-fashioned cash did meet the vast majority of consumers’ payment needs. But the times, they are a-changing.

While still a relatively small segment of the market, mobile payment – payments made using smartphone – is making serious headway. How serious? Consider this: In less than a year after Starbucks launched a mobile app complete with a payment option, the company reported more than 26 million mobile payments.

Smartphone use is on the rise and is playing a larger role in where people spend—especially in urban areas where users rely on apps like Yelp to read reviews of local hotspots before taking a gamble on a new businesses. Bumping up “accepting mobile payments” on your to-do list may be a wise move.

How Mobile Payments Work

With mobile payments (sometimes called “contactless payments” by providers), your customers’ smartphones double as their debit or credit cards, or even their banks accounts. Before they arrive at your business, they’ve linked their bank, debit card or credit card information to a specific payment app. Once they’re ready to pay, they tap their smartphones against a device—usually a SingleTap, MasterCard PayPass or Visa PaWave—near your registers that deducts payment from their mobile payment apps.

Mobile payments aren’t limited to brick-and-mortar storefronts. You can also offer mobile payments in your online store so customers don’t have to go through the hassle of typing in their credit card information.

Assessing Your Mobile Payments Options

Google launched its mobile payment service, Google Wallet, in mid-2011 and already claims 300,000+ locations accept this form of payment. This service adds a bonus for your brick-and-mortar store as it includes a Google Offer component that works like this:

1. Someone in your area uses a smartphone to search Google Offers for coupons related to your service or product. (Instead of using an app like Yelp that we mentioned earlier.)

2. Your business comes up in the search results, and the smartphone user decides to visit your store.

3. Google Wallet automatically redeems the coupon upon payment and allows you to distribute “loyalty points” — a rewards system Google hopes will keep customers coming back to your business.

Like any mobile payment app, Google Wallet currently serves a limited number of smartphones, and it’s not iPhone compatible. If you’re looking for a viable alternative, PayPal launched its own mobile payment service, PayPal Mobile Wallet, which may become a worthy adversary for Google Wallet in the near future. And keep your eye on the Intuit GoPayment.

With the smartphone and mobile payments battle still waging, you could end up picking the service that turns into the Betamax of mobile payments. But if your customers are known for tech savviness, starting to accept mobile payments now could be the key to drawing them in before your competitors get hip to the new technology.


About Business Owner’s Toolkit With an emphasis on problem-solving dating back to 1995, Business Owner’s Toolkit™ ( offers more than 5,000 pages of free cost-cutting tips, step-by-step checklists, real-life case studies, startup advice, and business templates to small business owners and entrepreneurs. The site also offers a monthly newsletter, up-to-date news topics, and Ask Alice!, a column that closely follows industry trends and provides trusted advice to inquiring site visitors.

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