Cash. Credit cards. Debit cards. Customers will soon be leaving home without them, or so we hear. But will the switch to a wallet-less society be as quick as the industry is predicting? Many consumers are still confused as to how this cashless society will work. Pay for purchases with their smart phones? It sounds like something out of a sci-fi movie. Never mind that just thirty years ago, the idea that we would pay all of our bills without ever writing a check and pay for everything else with one card would have seemed preposterous. We have to pay with everything via currency we carry around in our wallet. Right?
Wrong. According to Gartner Research, mobile payments are on the climb–up 38% from 2010. As businesses battle to see who will be the first to find a way to get your cash without you handing it to them, consumers are still resistant to letting go of plastic. There are several ways your mobile phone can now process transactions, according to VoucherCodes. The company described these “payment wars” in a recent infographic.
- Mobile card readers. PayPal, Square, and Intuit Go Payment are just three of the many businesses providing credit card readers that plug into the headphone jack of smart phones. This is ideal for small businesses on the go, wishing to allow customers to pay via credit card. It also allows consumers to continue to use plastic, although you may find yourself explaining the security of the devices to your customers. By the year 2015, these mobile point of sale systems are expected to gross $670 million.
- Near Field Communication. While this capability is still not available on all cell phones, near field communication allows you to pay via your cell phone without ever having to remove a method of payment. One major hold-up is that NFC is still not available on the iPhone, but it is rumored to be included in the next model, expected to be released later this year. To use NFC, you simply store your payment information on your phone, enter your pin when you’re ready to pay, and tap your device to any NFC-enabled payment system and payment is done. The merchant can print a receipt but the information will also be stored on your phone. By 2016, payments via NFC are expected to reach $320 billion.
- Direct Carrier Billing. This uses your cell phone number and a PIN to make purchases. Direct carrier billing already happens when you purchase something via cell phone–this simply allows you to pay for everything that way. Services providing DCB include Zong, Boku, and BilltoMobile. With a transaction fee of 40% to 90%, this payment method will likely never go far.
- Online Wallets. Since 2000, consumers have been using PayPal to transfer money for online purchases and personal transactions. Amazon Payments and Google Checkout have tried to get in on the action, too–no surprise, since PayPal processes $315 million a day.
Likely the future of payment will be a combination of most of the above. As a small business, you’ll benefit from accepting as many payments as you can afford to handle, since consumers will seek out those merchants who accept what they have to offer. As customers toss checkbooks and cash aside in favor of plastic, it’s good to know even the smallest business can get a free card reader and begin accepting credit.