When Apple Pay was introduced in 2014, many people scoffed at the idea of smartphones potentially replacing cash and credit card transactions. They’re not scoffing anymore.
Over the last few years, top technology innovators like Apple, Google, and Samsung have advanced the mobile payment industry by introducing next-generation apps that make mobile payments more accessible to consumers. Merchant support for the technology has also increased, as most credit card readers and point-of-sale (POS) terminals accept mobile wallets and other contactless payments.
We’ll explain everything your business needs to know about accepting mobile wallet payments and how mobile wallets can help future-proof your business.
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Mobile wallets are digital tools that help your smartphone make financial transactions, including credit card payments. Mobile wallet apps store financial data like credit and debit card information as well as identification, gift cards, and more.
Mobile wallets rely on NFC (near-field communication) mobile payment technology. Consumers don’t have to swipe a credit card. Instead, they place their phone near the payment terminal briefly until they’re alerted that the payment is complete.
Mobile wallets can also store and handle consumer incentives, like customer loyalty programs and coupons, replace paper boarding passes, and transmit credentials.
Mobile payments are on the rise. According to the Global Market Insights project, mobile wallet market size was valued at $220 billion in 2021 and is expected to expand at a compound annual growth rate of 17 percent from 2022 to 2030.
Smartphones are driving mobile wallet growth. According to Pew Research, about 96 percent of Americans use smartphones. This massive user base is fueling tech advancements and lifestyle changes amid demand for improved customer experiences and secure transitions.
Mobile wallets work in-store for small business transactions and can also be used for online payments. Customers can avoid carrying physical wallets and bags while using one device for all payments.
Consumers link mobile wallet apps like Apple Pay to existing credit or debit cards. Sensitive card data is replaced with encrypted tokens for extra security.
Setting up mobile wallet payments for your business is generally fast and affordable. First, you must choose a credit card processor that supports mobile payments. Hundreds of payment processing companies exist. However, the best credit card processors can set you up to accept digital wallets.
If you already have a payment processor, call your rep and ask what you need to do to accept mobile credit card payments and digital wallets – it may be as straightforward as upgrading to a new credit card reader with NFC capabilities. The card reader or terminal should cost you no more than $500; depending on the mobile payment provider, it might even be free.
If you’re not yet accepting credit cards, consider working with a mobile credit card processor like Square or PayPal. Setting up an account with them is quick and easy, upfront costs for processing hardware are minimal, and there are no monthly or annual account fees.
Check out our review of Square and our in-depth information on PayPal’s mobile credit card reader to learn more about these services.
For small businesses, accepting mobile payments can improve the customer experience and streamline processes. Additional benefits include the following:
The best POS systems allow companies to accept digital payments via mobile wallets while helping you track sales and manage your business.
Mobile wallets have preinstalled security features designed to stop unwarranted usage, including the following:
Mobile wallets aren’t perfect, of course. For example, your phone could lose power as you’re purchasing, a bug could render a QR code unreadable, and there’s always user error. However, mobile wallets are inherently more secure than other payment types and can help build customer trust.
Mobile wallet apps’ banking partners (i.e., the banks that host customers’ connected payment cards) pay the mobile wallet companies a small percentage of every purchase their customers make through the app.
For peer-to-peer payments through Venmo, merchants pay 1.9 percent plus 10 cents per transaction.
The mobile wallet market has exploded in recent years. Here are some mobile wallet options that stand out from the pack and serve millions of consumers:
Zelle for Business is a newer contactless payment option for businesses. However, your bank must offer Zelle as an option for your business account type for your company to use it.
Mobile wallet usage is growing, and businesses understand their payment options must grow along with consumer interest and demand. Mobile wallets offer benefits for consumers and businesses – as companies like Starbucks have already discovered. If you’re not already set up to accept mobile wallet payments, check with your credit card processor to see how you can quickly get up to speed on this growing payment trend.
Linda Pophal contributed to this article.