The following is a guest post (contributed article) by John Rampton, founder and CEO, Due.
By all accounts, mobile payments are growing in popularity. According to a Javelin report, estimates for mCommerce purchases are that they will comprise 49 percent of all online U.S. retail transactions by 2020 and totaling approximately $319 billion. Data from Criteo found that nearly half of all UK ecommerce transactions take place on mobile devices while ING’s survey found that 66 percent of all European mobile device owners have used their device for purchases.
These statistics illustrate one of the biggest benefits of mobile payments for your business: you have the ability to track many more customers than if you didn’t accept this popular payment method.
With the expectation that companies and retailers will just automatically offer mobile payment capability, you may be doing your small business a disservice by not offering this payment method. However, you may have worries about whether it is a realistic and rational business decisions for your small decision.
Here are some of the benefits and risks of mobile payments that you should consider as a small business owner:
The Benefits of Mobile Payments
While a primary benefit has been listed already, here are some other advantages to offering mobile payments at your small business:
Adding a mobile payment system is considered to be a relatively inexpensive investment that pays big returns. There is no requirement like putting in or building a big system to accept these types of payments. Not needing to spend money or make huge infrastructure changes to accommodate it makes mobile payments very attractive for a small business owner.
You can increase sales in more ways than just actual mobile payment acceptance for credit and debit cards. That’s because mobile payments give you the ability to easily and affordably integrate incentive programs in your business. You can improve your marketing and sales efforts through your ability to use the mobile payment system to more efficiently track your inventory and collect useful data that identifies changes in customer purchase behavior and shopping trends.
Mobile payments actually speed up the checkout process, which means you can improve your overall user experience. The faster you can process customer payments, the more you can accept, helping to grow your revenue and develop satisfied customers that will return and tell others about their great customer experience.
You can save money on transaction fees because most processing companies offer a much lower total fee amount on mobile payments than other payment acceptance methods.
Risks Involved with Accepting Mobile Payments
While all these benefits sound great, there are some risks with mobile payments that you will need to weigh like these:
Compliance is one of the biggest issues for companies, particularly small business owners that are concerned that any non-compliance could cost them in penalties, fees, and reputation. While there are no specific federal regulations right now in regards to mobile payments, but general laws already in place with traditional credit card payments do apply. You would want to make sure that the mobile payment technology you use does meet current compliance related to traditional credit card and debit card acceptance and processing.
Fraud is another huge risk that you may take on when accepting mobile payments. The problem is that, as a payment method becomes more popular, criminals start to pay attention to it more because they see their opportunity increasing. There are numerous vulnerabilities, according to an ISACA 2015 Mobile Payment Security Study, which include use of public Wi-Fi, phishing schemes, weak passwords, and loss or theft of the actual mobile device. Issues relate to malware and other cyberthreats that, as a small business owner, you may not realize exists. It means becoming more vigilant in understanding what types of crimes are committed in relation to mobile payments and familiarizing yourself with existing security technology, such as encryption, two-factor authentication, tokenization, biometrics and more.
According to the Federal Reserve’s 2016 Consumers and Mobile Financial Services Report, the mobile payments industry can be considered to still be in its infancy, which means there will need to be a lot of growth and development, also creating a certain amount of risk. While this doesn’t mean to not get involved in offering mobile payments, it is something to consider in terms of what still must change for it to become a more widely accessible way to make and accept payments.
With both positives and negatives associated with mobile payments and mobile acceptance, there is a lot for you to consider as a small business owner. A good place to start is to consult with your payment processing partner or to find one who can offer more specific advice and strategy for your individual business needs
About the Author
John Rampton is an entrepreneur, investor, online marketing guru, and startup enthusiast. He is the founder of the online invoicing company Due. John is best-known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and a Blogging Expert by Time. He currently advises several companies in the San Francisco Bay area.