By 2023, mobile payment transactions are set to exceed £3.5 trillion.
Mobile payment is an increasingly prominent method of payment and should be noted by businesses of all sizes. This method of paying has not only changed the way we purchase but where we purchase.
Any payment that you make with your smartphone or tablet qualifies as a mobile payment. It’s that simple. The first mobile payments occurred in 1997 when Coca Cola introduced a vending machine that would deposit a cold carbonated beverage once the customer texted a given number. Since then, mobile payments have taken off.
Beyond texting a vending machine, mobile payments has expanded to a variety of types. Let’s familiarise ourselves with a few of the most common.
In a digital wallet system, a user’s credentials are stored on their phone, tablet or computer via software and can be used to make e-commerce transactions. Whether it’s the individual’s bank account or credit card details, the consumer can make purchases online or in-store with this software.
Similarly, a mobile wallet operates in the same manner, but it’s an app exclusively for a smartphone.
Mobile and digital wallets are more customer-oriented than the traditional cash register as the customer is the one who initiates the transaction and the method of payment. This gives the customer a greater sense of control at checkout while freeing up more time for the person taking the payment.
Well-known mobile wallet apps include GooglePay, ApplePay and Venmo. Here at SumUp, we’ve developed our own app, sumup.io. Download it now (iOS/Android) to see how your business can grow by adding cashless payment methods.
NFC, an acronym for Near Field Communication, is the name of the technology that allows two devices in close distance to exchange encrypted data via NFC chips using radio waves.
When a customer holds their phone over a device to pay, that’s NFC payment, also known as contactless.
This means a quick payment method that’s highly secure. As NFC payment readers are only able to connect to one device at a time, there’s no way a customer can accidentally be charged for the customer in front of them.
While a majority of those using peer-to-peer payments, also known as person-to-person payments, originated in countries where people don’t have widespread access to banks, the rest of the world is beginning to utilise this payment type for payment among friends and family.
Peer-to-peer payments can be sent via SMS text messages or more commonly, NFC technology. Most major banks in the UK, Google Pay, PayPal, Venmo, and Facebook messenger even have their own popular peer-to-peer payment apps.
Smartwatches, payment wristbands, and fitness trackers all fall under the category of wearable technology and can make payments via NFC technology. This means you can go for a run and then purchase a smoothie with your smartwatch without needing to go back home to grab your wallet.
As NFC payments will continue to grow in use, the cost of NFC technology will decrease, further adding to its rapid utilisation. By 2026, this technology is predicted to reach a value of 82 billion pounds.
This payment method allows consumers to pay for goods or services online by charging the bill to their mobile phone bill. The consumer doesn’t have to struggle to enter their credit card details on their small phone screen to make a purchase. They can simply enter their phone number to pay.
No bank is needed which makes this method highly democratising in terms of financial inclusion. The person using direct carrier billing needs only a prepaid smartphone or subscription to one. The use of this payment method has increased tremendously over the last few years and is expected to be valued at around 13 million pounds by 2020.
This type of transaction occurs when an individual puts money into a spending account which is connected to a payment device. This account is linked to one specific company and can only be used there.
For example, megabrand Starbucks was one of the first to offer this option with its Starbucks App and has been wildly successful. The app allows members not only to top up their card to make purchases but to track the purchases and related data as well as receive loyalty rewards on their phones, creating incentives to return.
If you own a small business and have yet to accept mobile payments in your establishment, consider this:
Half of adults in the UK said they use mobile payments, and
53% of millennials said that they want to manage loyalty rewards on their phones.
Both of these numbers are predicted to skyrocket over the next couple of years.
Did you know that 80% of UK retailers believe that accepting mobile payments directly motivated their shoppers to return to their store?
As customers using mobile payments don’t have to pull out their wallet, in-store queues are reduced. This gives you the chance to interact more with the customer, potentially upselling them on a product or service.
Having clients is great, but what’s even better is when these clients are big spenders.
Consumers using mobile payments outspend non-users two-to-one in the UK and the US. Two. To. One.
Just as credit card users outspend those paying with cash, mobile wallet users also spend more than cash carriers. Make sure that these larger spenders feel welcome to shop in your business.
The convenience of mobile payments is another major factor in its recent uptake. Even physical credit cards are predicted to be phased out by mobile wallets.
When a business owner utilises a mobile payments solution, they can easily track and oversee customer data. This data can be incredibly useful for understanding customer behaviour and then building informed marketing strategies.
Mobile payments is a great way to continue interacting with your customers long after they’ve left your storefront. Many mobile payment solutions let business owners personalise a brand loyalty programme. The cost of this is a fraction of advertorial costs associated with tv ads, web banners or flyers and yet they still attract powerful attention for your business.
Allowing your clients to earn reward points with your business is a great motivator for them to become repeat clients. Whether it’s “Buy 4 and get the 5th drink free”, earning loyalty points or receiving an extra insider member discount each month, you’re creating additional engagement opportunities for your brand.
Mobile payments and digital wallets are actually reported as safer than traditional payment methods.
Your customers’ data is safe as mobile payments are not only encrypted but the authorisation of the transaction via artificial intelligence, two-step factor authentication or biometric measures (Touch ID) also prevents hackers from getting their card details. The apps create a one-time tokenised code for that specific purchase, so no employee nor anyone standing nearby can access the customer’s credit card details.
Offering mobile payments gives your business a competitive edge at the moment as they haven’t been fully implemented yet. But trust us, soon they’ll be a necessary payment method for business owners everywhere.
Looking for some affordable mobile payment solutions? We love helping business owners succeed in doing what they love and have created payment solutions just for them. Take a look.