Everything You Need to Know About Mobile Payment Processing
Every small business owner today has the power to transact in the palm of their hands via mobile payment processing — you don’t need a clunky point of sale (POS) machine any longer. Your phone, some software, and a tiny piece of hardware are the only tools required to take credit card payments today.
Mobile point of sale (mPOS) technology has been on the rise for years. Over 1.49 billion people worldwide use mobile POS payments today. The reason? Mobile POS is convenient for merchants to take wherever they go. Some software systems even allow merchants to capture card information and other useful data.
However, alongside these mobile devices, businesses also need mobile payment processors to enable these transactions. This comprehensive guide will help you with everything you need to know about mobile payments and mobile payment processing.
Let’s get started.
What is Mobile Payment Processing?
Mobile payments are payments that you can accept and process using your iPhone or Android devices. All you need to do is connect your mobile credit card reader and download the software.
The card reader will then communicate with your smartphone or tablet app. Some of these hardware devices can be plugged into the headphone jack, while others connect wirelessly via Bluetooth.
Imagine that you run a busy restaurant. With mobile payments, your customers don’t need to come to your checkout counter to make a payment. With the hardware connected to your mobile card reader device, they can swipe or tap their card right from their table and complete the transaction.
This is especially useful in the COVID era — customers who want to pick up their takeaway orders don’t need to come inside your restaurant to pay. Instead, you can bring your mobile card reader payment terminal outside to them while following all safety norms.
How Does Mobile Credit Card Processing Work?
As with all types of credit card transactions, payments are processed through a merchant account provider. This goes for in-store transactions using a traditional POS system, online store transactions, or transactions involving mobile credit card readers.
In some cases, the brand or provider of your mobile payment device may be different from your merchant services provider. The device provider offers the hardware and software (the physical mobile swiper and mobile app or online platform). The processor (or merchant services provider) processes the transactions.
Your mobile payment processor is the one that deals with banks, credit card networks, and the entire payment facilitation process. While they do charge credit card processing fees, they don’t set the rates — the banks and card providers do.
The Benefits of Mobile Payment Processing
If you have a POS solution that unplugs and is able to move around the store, you may be wondering how mobile payments are different. These are the key benefits that make mPOS a better payment method for SMEs:
1. Mobile POS Solutions Use Your Mobile Network
Unlike unpluggable EFTPOS machines, mobile payment solutions run on your mobile network. Your unpluggable POS machine may be able to leave the cash register, but it probably can’t leave your Wi-Fi connection.
Mobile payment devices are truly mobile. You can take credit or debit card payments on the sidewalk, run a pop-up at the markets, or take payments on the move — no more need for invoicing.
2. Mobile Point-Of-Sale Systems Bring You Closer to Your Customers
Every little thing you do to enhance the customer experience goes a long way in making your business stand out. Accepting payments at the table or on the sales floor is a simple yet powerful gesture that shows your dedication to making the customer experience smoother.
Especially when businesses are trying to create safe physical distances between customers, bringing the POS system to your customers makes them feel comfortable. All the while, you have a bit more control over the movement of people in-store.
3. Mobile Card Readers with Easy Set Up and Use
Mobile POS hardware and software are extremely easy to use. Designed to work intuitively (like the mobile apps people use all the time), the learning curve is minimal. Merchants can simply connect, download, and go. Payments are processed straight into your business bank account.
The process is the same as with traditional POS systems: tap, swipe, or dip. Also, most mobile card readers and payment software providers offer online resource pages and round-the-clock customer service.
4. Better Pricing for Mobile Payment Processing Software
Mobile payment options tend not to require the same long-term contracts as traditional POS systems. This is because there is less to pay for. The hardware itself could be bought upfront for around $50, rather than the $1500 or so a traditional terminal may cost you.
With a mobile card reader point-of-sale system, your business needs are met without the hassle of ongoing commitments. Such cost-effective flexibility makes mobile payment apps and hardware a great choice for new retailers and small businesses.
Mobile Payment Processing Terminology You Need to Know
Wrapping your head about payment terminology can be a bit tricky. However, getting a feel for the lingo can help you determine which is the best mobile credit card software provider and mobile credit card processors for your business. Here’s everything that you need to know.
Credit Card Reader
The card reader is the piece of hardware that makes the mobile virtual terminal possible. The card reader plugs into your iPhone, iPad, or Samsung, etc. equivalent. It’s what your customers will tap, swipe, or dip into to complete their transaction.
Contactless Payments
Popularized exponentially by the pandemic, contactless payments are the “tap” we refer to above. Contactless payments require both the customer to have the right card and the merchant to have the right device.
Customer payment methods – Most cards these days are able to be read using near field communication (NFC) technology that makes contactless payments possible. They will have a connection icon on them to signify this. In addition to physical cards, all mobile wallet solutions like Apple Pay, Google Pay and Samsung Pay use near-field communication to accept payments.
Merchant credit card reader – Not all mobile credit card readers work with NFC. If you want to accept payments via a contactless method, you need to make sure you look for an NFC reader that will accept mobile wallet payments.
NFC
As mentioned above, NFC stands for near-field communication. This is the technology that enables contactless payments. Most cards these days can be used with near-field communication. Merchants that want to accept contactless payments will need an NFC reader.
EMV
EMV is a funny finance acronym as it actually stands for Europay, Mastercard, and Visa, but it’s on all cards, including American Express. While the name doesn’t tell you much about what it is, the technology is the most widely used today. The EMV is the chip embedded in almost all prepaid, credit, and debit cards.
EMV credit card readers are those that have the capability to insert the customer’s card into a chip reader.
Chip Card
You can probably guess from the section on EMV above that a chip card is a card that has the EMV chip. It’s important to know both terms as customers may refer to them interchangeably. Credit card processors may also list them interchangeably when referring to their solutions.
Magstripe
The longest-standing technology for credit card processing is the magstripe, which is short for magnetic stripe cards. This can be found on every credit, debit, reward, prepaid, and gift card.
Although this is the most common technology found on cards, not every POS system accepts it anymore. Especially in the mobile POS space.
If you want to accept credit cards via magstripe, you will need to look out for card readers that have the swipe function — the magnetic reading head.
QR Code
QR code stands for quick response code, and its function is to bring up information quickly. Over the years, the use of QR codes has proven limitless. Most recently, they’ve been popularized in restaurants as a result of the pandemic.
Customers can scan the barcode/QR code and bring up menus and other information to limit the use of physical menus for health and safety. They can also be added to receipts so that customers can scan and pay bills.
Factors to Consider When Choosing a Mobile Payment Processing Solution
Now that you understand what mobile payment processing is, it’s time to weigh up what you need from your mobile payment processing solution. Ask yourself the following questions:
- Which payment methods do I need to accept? (E.g. NFC, EMV, magstripe)
- Do I need a robust long-term solution or something to accommodate a short-term project?
- How comprehensive does my solution need to be?
Determining your goals before shopping around will help you quickly identify the solutions that best fit your needs. If you are planning a short-term pop-up, you may not need a provider offering insights and analytics, for example.
If you’re a busy retailer, however, you’re probably going to need to accept all payment types and gather data that can help you to improve your sales and processes long-term. The nature of your business will also indicate what level of customer service you need available.
The Best Mobile Credit Card Processing Solutions for Small Businesses
Based on the factors mentioned above, here are our top picks for mobile credit card payment providers for small and medium-sized businesses.
1. Payment Depot
Payment Depot is arguably the best option for established small to medium-sized businesses. Mobile payment processing can become expensive when the sales volume increases. Square and PayPal are the most popular for those starting out, but their fee structure gets quite costly as your business grows.
Payment Depot is a dedicated payment processor using SwipeSimple for mobile payment solutions. SwipeSimple’s card reader and mobile phone app lets you add tips, use a product catalog, process returns, and save payment information easily.
Pros
- Low membership-based pricing
- Free virtual terminal and payment gateway
- Monthly billing and no cancellation fees
- 90-day money-back guarantee
Cons
- Does not cater to high-risk businesses
- Available only in the US
2. Square
For small businesses looking to dip their toes in mobile payments, Square (and PayPal) have the lowest barrier to entry. Square has no startup or monthly fees. You just download the free mobile e-commerce app on your mobile phone and order your card reader or mobile swiper.
The Square app conveniently works offline and is compatible with an iOS or Android mobile device. The POS software also includes free business management tools.
Pros
- Free POS system
- Easy chargeback dispute
- Instant sign-up, no application or approval required
- Works with mobile phone, in-store, and online sales channels
Cons
- Unsuitable for high-risk or high-volume businesses
- Expensive for large businesses
- Customer support is not always easy to access
3. PayPal
Known historically for online payment processing, PayPal is now very much in the in-person payments space. Their mobile credit card processor brand is PayPal Here. Their mobile credit card processing is one of the easier options for small businesses just getting started.
PayPal integrates with a variety of platforms and accepts a range of payment methods. It’s also proven to have very strong security features.
Pros
- Easy to set up and use
- Instantly pays out to your PayPal account
- Affordable for small transaction values
Cons
- $500 weekly limit for swiped and keyed-in payments
- Funds over the limit are held for 30 days
4. Shopify
Leaders in the e-commerce sector, Shopify, also offer solutions in the in-store payment market to give their merchants continuity across their sales channels.
Shopify is best suited for retailers, especially those who already use the Shopify platform for their e-commerce store. Unlike PayPal and Square, Shopify has monthly fees.
Pros
- Connects to your phone via Bluetooth
- Supports inventory management
- Handles reporting
- CRM functionality
Cons
- Monthly fees
- Add on solutions can increase costs significantly
- Offline mode is unreliable
Another notable mention goes to QuickBooks, which has a free mobile credit card reader and only charges per transaction. We haven’t discussed it in more detail as it does end up being quite expensive as transactions increase.
All of the card readers and solutions mentioned above are PCI certified, keeping both you and your customers safe.
Moving Forward With Mobile Payment Processing
Mobile credit card payments give your small business the flexibility to operate on the move, wherever your customers may be. Payment Depot offers every flexibility and functionality you might need from a mobile payment processing solution, without any unnecessary fees.
Our membership-based pricing and zero processing fees ensure that the more payments you process, the more you save. Contact us today to learn how you can thrive with Payment Depot by your side and save over $400 per month in credit card processing fees.
Quick FAQs about Mobile Payment Processing
Q: What is mobile payment processing?
Mobile payment processing allows merchants to accept and process payments using mobile devices like smartphones or tablets. By connecting a mobile credit card reader and downloading the respective software, merchants can accept payments anywhere, anytime.
Q: What are the benefits of mobile payment processing for small and medium-sized enterprises (SMEs)?
Mobile payment processing offers several benefits for SMEs. It enhances the customer experience by allowing payments at the table or on the sales floor. It’s more cost-effective than traditional POS systems, requiring less upfront and ongoing costs. Additionally, it enables businesses to accept all types of payments, including NFC, EMV, and magstripe.
Q: What tools are needed for mobile payment processing?
To process mobile payments, you need a mobile device (such as an iPhone, iPad, or Android device), a mobile credit card reader, and the required payment processing software or app. Some card readers plug into the headphone jack, while others connect wirelessly via Bluetooth.
Q: What is the role of a mobile payment processor?
The mobile payment processor facilitates the entire payment process. They deal with banks, credit card networks, and help process the transactions. While they charge credit card processing fees, they don’t set the rates — the banks and card providers do.
Q: What are some recommended mobile payment providers for small and medium-sized businesses?
Some top picks for mobile credit card payment providers for small and medium-sized businesses include Payment Depot, Square, PayPal, and Shopify. These providers offer different benefits and cater to various business needs, from low-volume startups to established retailers.
Q: What types of payments can be accepted using mobile payment processing?
Mobile payment processing allows businesses to accept a variety of payments, including NFC (Near Field Communication), EMV (Europay, Mastercard, and Visa), and magstripe. It also enables the acceptance of mobile wallet payments like Apple Pay, Google Pay, and Samsung Pay.
Q: What is NFC, and how does it relate to mobile payment processing?
NFC stands for Near Field Communication, a technology that enables contactless payments. To accept payments via NFC, the merchant needs an NFC reader and the customer’s card or mobile wallet must also support NFC.
Q: What is EMV, and how is it used in mobile payment processing?
EMV stands for Europay, Mastercard, and Visa. It’s the technology embedded in the chips of most prepaid, credit, and debit cards. EMV credit card readers can insert the customer’s card into a chip reader for processing.
Q: How do QR codes work in mobile payment processing?
QR codes, or Quick Response codes, are used to bring up information quickly. In the context of mobile payment processing, customers can scan QR codes to access menus, make payments, or retrieve other information. This technology has been popularized in restaurants during the pandemic to maintain health and safety standards.
Q: What are the security measures in mobile payment processing?
Mobile payment processing providers ensure security by encrypting credit card information at the moment of transaction. They also adhere to PCI compliance standards to ensure both the business and its customers are protected.