Mobile payment technology is everywhere now, including many small businesses. There are still pros and cons, but there are an increasing number of pros for small businesses that offer mobile payment alternatives, including meeting customer demand and streamlining cash flow. But for small businesses and their customers, two issues loom big: Privacy and security.
While mobile technology seems to be secure at the moment, we’ve seen just in recent months that we probably can’t consider any payment foolproof. There’s going to be some degree at risk, regardless. And while that may be a deterrent for some consumers, most want the ease and simplicity of card-based or virtual payments. (From the customers’ perspective, this is also called digital wallet.) Some may balk, for instance, at having their payment data stored in the cloud but readily hand a credit card over to just about anyone or even read their card number over the phone to make purchases! Experts say these are far riskier transactions than virtual payments; consumers just don’t think about it that way.
Business Insider says that, in view of the aggressive rollout of consumer and merchant apps, mobile payments are poised to explode. The site says that as mobile devices pick up more and more utility, consumers are becoming believers in their value as payment devices, which they see as much easier than cards, cash and coins. Would you believe that in-store mobile payments nearly quadrupled last year, as just one part of mobile commerce? In 2012, only 7.9 million consumers in the U.S. had adopted a method of making mobile payments, such as apps that use QR codes or a system like Google Wallet. But in 2013, PayPal alone processed $14 billion in mobile payments—a true sign of things to come!
Business Insider points out that as tablet and smartphone use explodes around the world, so will global mobile payments, even in developing countries, many of which have poor or no infrastructure at all. This sets the stage for unprecedented growth in mobile payment solutions, also fueled by merchant adoption, including at the point of sale. Forecasts are that by 2017, the total value of mobile payments globally will reach $1.5 trillion (this was $120 billion in 2012.), with the user base making these transactions projected at more than 500 million worldwide, compared to 75 million last year. Just in the U.S., the value of mobile transactions is expected to hit $244 billion by 2017, as compared to “just” $15 billion last year!
Besides being able to offer customers convenient and streamlined payment alternatives, small businesses stand to benefit from accepting mobile payments in another big way: A boost to cash flow. It’s a real game changer in terms of speeding up receivables and giving businesses immediate access to their cash. As a result, Infoworld.com says, small businesses may actually be a huge driving force in the adoption of mobile payments. This new-found way to get instant working capital from sales may also be a factor in a diminishing need among some businesses to get loans or lines of credit.
There’s still the downside, which is the increased possibility of fraud, as criminals figure out how to break into existing payment accounts. And there’s the reality that mobile payments must provide “value” for everyone in the equation, according to The Money Times: Consumers who are buying; merchants who are selling; financial institutions and processors. (The roles of the latter two in the payment equation are changing very dramatically.) Even as the industry continues to shake out, it’s clear that mobile payments are changing the world of commerce for everyone involved.
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