Using Your Smart Phone to Accept Mobile Payments¹

Using Your Smart Phone to Accept Mobile Payments

For more and more small businesses, the ability to accept payments outside of a traditional retail location offers critical advantages. From limousine drivers to craftsmen to repair technicians, being able to accept credit and debit card payments directly where products are sold or services are delivered can increase customer convenience and merchants' sales.

Because demand is growing to accept payment cards in a wider range of locations, an increasing number of wireless providers, payment processors and card issuers are teaming on products and apps that help merchants and service providers turn their smart phones into payment acceptance devices.

The ability to accept payments wirelessly can offer a number of benefits to small business owners, and can help companies establish virtual storefronts that help them serve customers without having to invest in physical real estate.

Using a smart phone as a virtual payment gateway device allows even the smallest of service providers or merchants, for whom an investment in a dedicated card reader may have not been cost-effective, to safely accept payment cards.

Processing Payments

Mobile payment applications take different approaches to how merchants can input payment and sales data in the field. Some rely on merchants punching in a customer's card data into a smart phone browser. Other approaches use dedicated card readers that can be attached physically to a smart phone, or connected via Bluetooth. Merchants swipe the card, as they would with a traditional hard-wired point-of-sale payment terminal.

With both approaches, sales data is sent over wireless networks to the merchant's payment processor for authorization and reconciliation. A browser-based app can send the customer a receipt via e-mail, while a connected device may offer a choice between a printed or e-mailed receipt.

Even in traditional settings, the use of wireless payment devices can offer a number of advantages. In a retail store, sales personnel can accept payments without sending customers to stand in a line. In a restaurant, a payment can be processed directly at the diners' table, without the potential security concerns of a server taking a credit card out of the customer's sight.