Trendspotting: Taking payments from customers via mobile apps
Russell Berry, of mobile app developer AppCreatives, gives us the lowdown on how the mobile payments space is evolving
As the growth of smartphone adoption increases across the globe, so too has their attractiveness as a mobile payment device. Starbucks, for instance, says that last year more than 26 million in-store transactions were paid for on mobile phones via the Starbucks Card mobile app.
With the volume of all types of mobile payments set to top $200bn by 2015, up from $16bn in 2010, (according to research and advisory firm Aite Group) even the market for mobile card acceptance by small businesses and individual merchants is probably around $4bn currently – and it’s growing fast!
Besides Google Wallet and the (upcoming) iWallet from iPhone5, there are a number of ways your business could be selling to customers via any internet-connected device with a mobile payment gateway.
Technically, mobile payments include a mix of transactions enabled by, or enhanced by, mobile phones, tablet PCs and other internet-connected devices. So even if you are not a bricks-and-mortar retailer, you too can accept mobile payments.
The major players
Two models are emerging for the use of mobile devices in place of swiping a card or paying cash. The first requires near field communication, a radio system that lets two or more devices send and receive data at very close range.
Google Wallet is a good example of this. It runs on NFC-enabled Android phones, including the Samsung Galaxy, Nexus S 4G and HTC One devices. Apple and RIM also are expected to add NFC support to forthcoming devices.
There are other options besides NFC that businesses can adopt to let customers use mobile phones to make payments. Payment acceptance apps, such as Pay Anywhere and Square, are also viable alternatives.
Square has just released its mobile phone app called Card Case. Rather than tapping the phone on the point-of-sale terminal, the customer sets up a Card Case tab with the merchant. At checkout, the customer types the merchant’s name into his or her Card Case account on a mobile device, along with the amount of the purchase. That amount is then transferred to the merchant. Card Case users fund their accounts using a standard credit card.
Some large retailers are also trialling proprietary mobile payment options that don’t rely on NFC. Starbucks lets users link rechargeable Starbucks Cards to their mobile devices via an app. The app, available for Android and Apple phones, displays a bar code that is scanned at checkout. It also tracks loyalty points and lets users check card balances and add money to their accounts.
Even with the noted security concerns, consumers are starting to experiment with mobile payments, according to market research firm NPD. They have found that nearly 35% of Android users monitored in March were using mobile-payment apps, a rise of 8% since August.
Therefore, retailers have a vested interest in making it as easy as possible for customers to give them money in whatever manner they choose. Mobile apps provide an opportunity to create and strengthen customer reward and loyalty programmes, offer coupons and in-store discounts, and strengthen brand loyalty.
Imagine the new audiences of customers this creates for your business. Even a corner restaurant could now accept orders placed on any internet-connected TV or iPad (nearly all new TVs are connected).
Where to start?
One of the top performing payment apps is from PayPal; it has a product called Express Checkout that’s great for small and medium-sized businesses wanting to take mobile payments. The benefits are that: … It works on iPhones, Androids, Blackberrys and other devices … Customers can checkout and pay in a few clicks … It can sit behind either a mobile website or app … All you pay is a small fee when someone buys
Now is the time to be sure that you are keeping up with your customers, and being able to accept payments by mobile phone should open up a realm of opportunities.
Russell Berry is a director at mobile app developer AppCreatives , which designs and builds innovative apps for iPhone and Android devices