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The words "mobile payment" get thrown around a lot as more consumers choose to pay for goods and services in unconventional ways and more merchants choose to accept these cashless forms of payment
Whether you're a thirsty vending machine patron using a smartphone to buy a can of soda or a farmer accepting credit card payments for cucumbers at the Saturday market, you're a pioneer in the mobile payments movement.
But even pioneers can use a few pointers on how mobile payments work and how to use them. Here are three mobile payment trends that every smartphone-toting consumer and on-the-go shopkeeper needs to know about.
What's the difference between a mobile wallet and a digital wallet? The answer to that question is simple: Digital wallets aren't mobile. So what makes them part of the mobile payment movement? Simply put, without digital wallets, mobile wallets wouldn't be possible.
The digital wallet was first popularized by e-commerce giant PayPal in the early 2000s as a way to securely pay for goods online using a credit card.
PayPal lets users link their bank accounts, debit cards and credit cards directly to one online account. When shopping online, users can then choose to pay directly from their digital account or “digital wallet.”
This not only means that all of users' payment information is conveniently available in one place, it also means that the vendor they are buying from never receives their credit card information. PayPal pays the vendor and the PayPal user pays PayPal.
Today's mobile wallets are based on this same principle of paying vendors through a third party instead of directly with credit or debit cards.
Most major credit card companies, including MasterCard and Visa, offer digital wallets for their customers. And in recent years, these companies, along with PayPal and other e-commerce sites, have worked with smartphone developers and cell providers to make their digital wallets mobile.
If your online business doesn't already accept payments from PayPal or another digital wallet provider, don't despair. Giving your customers more payment options is as easy as linking your PayPal merchant account to your website's shopping cart platform. Monthly pricing is flexible and transaction fees are competitive.
A mobile wallet is basically a digital wallet's hip little sister. Mobile wallets offer the same security and convenience of digital wallets, but they're a lot cooler because you can carry them in your pocket.
Mobile wallet users first create a digital wallet with MasterCard, Visa, Google or one of several other providers. All of their credit and debit card information is then available in one place.
Mobile users then activate their mobile wallet on their mobile device by downloading the provider's corresponding app.
Once they have the mobile wallet app, shoppers can start using their smartphones to make payments at any merchant with a near-field communication reader available at checkout.
Near-field communication (NFC) uses radio frequencies to allow smartphones and other NFC-enabled devices to communicate with one another. If you've ever used a smartcard to enter a train station or paid for something with a tap of your credit card, then you're already an NFC veteran.
Even with an NFC-enabled smartphone consumers can use a mobile wallet. With PayPal, you can use your mobile wallet simply by entering your cellphone number into the PIN reader at the checkout counter of participating merchants.
Google Wallet, which can be used on many Android smartphones, also allows users to store loyalty cards and digital coupons in their mobile wallet.
This not only means that Google Wallet users have fewer annoying keychain cards to tote around, they also are more likely to remember to use those coupons they've been collecting. Redeeming points and offers is as simple as a tap of the smartphone.
Merchants that already have an NFC reader linked to their point-of-sale terminal can sign up online to accept Google Wallet, as well as other mobile wallets. If you don't have an NFC reader yet, then contact your credit card processing company to see if they can provide you with one or order one from the provider associated with your mobile wallet of choice.
Mobile credit card payments
What if your business, like your wallet, has gone mobile? Whether you're a farmer, a lawyer or a food truck chef, mobile credit card payments will allow you to get paid on the go.
And if you're a customer, then you'll be happy to hear that you don't necessarily have to drop by the ATM before heading over to your local farmer's market or street fair.
There are many merchant service providers offering mobile credit card readers that attach directly to a smartphone. They work just like in-store credit card machines, but are portable and require only a corresponding app.
Square, one of the most popular mobile credit card processors available, built its reputation on sleek, modern design and a no-frills approach to payment processing. If you're a business owner looking for a truly flexible way to accept mobile credit card payments, Square might be your best bet.
With Square, you can either pay a $275 monthly flat fee with no additional transaction fees, or pay a 2.75 percent fee per transaction with no additional monthly fees.
If those price points don't work for your business, you might consider Intuit's GoPayment or PayPal Here, both popular with savvy business owners.