Over the past two decades, advancements in technology have seen almost every other day-to-day life application being incorporated into the cell phone. It started with simple applications like the calculator and the calendar, and with every leap of smartphone technology, newer and increasingly complex applications like email, internet browsers, GPS and maps, radio, music and video players and various other apps have made it to your smartphone.

Over these years, the smartphone has rapidly evolved and is increasingly becoming an important part of any business imaginable.

Of course, this has a lot to do with a certain technological innovation that now makes it possible to make and receive payments via smartphones.

How Your Customers Can Pay with their Smartphones

© Shutterstock.com | Robert Kneschke

In this article, we will start with 1) an introduction to payment via smartphones, and continue then with 2) the advantages and 3) disadvantages of smartphone payments, and 4) how to introduce smartphone payment options to your business.


What is a payment via smartphone all about?

A smartphone payment is a mode of payment that utilizes your bank account information that is available via your smartphone (as opposed to information held on your debit or credit card) to make payment transactions. Any smartphone transaction takes place via an application generically known as a smartphone wallet app, coupled with the smartphone’s Near Field Communication (NFC) facility. NFC is available on the latest editions of the Apple iPhone, namely the iPhone 6, 6 Plus, and the very latest 6S and 6S Plus. NFC is also a common feature on most Android smartphones that use the Android 4.0 OS version (ICS) or newer.

Wallet apps like Apple Pay and Google Wallet are decidedly safer and more secure than traditional credit cards, because these wallet apps do not use sensitive information like credit card number and expiry date during the transactions.

What kinds of businesses need mobile payment options?

While certain businesses like service-providers may not immediately see the fruits of spending on a mobile payment option, there are many businesses for whom quicker turnaround times translates to better profits. Great examples of such businesses are restaurants (especially fast-food chains), taxi and car hire services, ready-mix mortar suppliers, on-demand mechanics and such like. Over the past few years, with the advancements of technology, many generic businesses have added a web-based and phone-based order option and these include supermarkets, bakeries, confectioners and flower shops. Rapid checkout of goods is the USP of mobile payment, and more and more businesses are drawn into this payment method every day.

The easy ways to turn your smartphone into your wallet

Smartphone payment technology is still in a nascent stage of development, but it is slowly turning into a viable mode of payment that is competitive and practicable enough to substitute your wallet and your credit cards.

The first step that you might like to take to gradually switch to this innovative mode of payment is to use gift and loyalty cards that are available on popular ecommerce platforms such as Amazon. These cards are stored as bar codes or the increasingly popular QR codes and can be scanned via a scanner from the display of your smartphone. You can also use loyalty cards supplied by PayPal on your smartphone. PayPal has formed tie-ups with certain restaurants and fast-food chains and these outlets allow you to use its loyalty cards as a payment mode. PayPal has also tied up with some other businesses like home improvement chains and this list is gradually being expanded. Others like tech giant, Apple has launched Apple Pay and mega retail chains like Target and Wal-Mart have added the mobile payment option recently.

The most important thing to note when planning to use your smartphone as a wallet is to ensure that it has NFC because, as it turns out, NFC is the future of all mobile payments. As of now, Android smartphones have the edge over Apple iOS as far as contactless NFC payments are concerned.


Smartphones are going to be decidedly the most convenient form of payment in the long run. The list of advantages it delivers over conventional payment modes is virtually endless. Below, we list out the most obvious.

Easy to use

The most noteworthy feature of a smartphone payment app is its ease of use. All your customers need to do is to pre-load their credit card information on to the app and when making the payment, all they have to do is to launch the app and scan its screen like a vinyl card. Most of these payment apps are alike, so your customers would not need to train themselves every time they switch to a new payment app. However, most retailers accept popular payment apps like Google Wallet and Apple Pay.

Easy access to marketing data

As a business owner, getting access to your customers’ smartphone is a much bigger deal than getting access to their credit cards. When you are swiping your customer’s credit card, all you are getting access to is their credit card number. However, the scenario is very different when handling your customer’s smartphone. For starters, you instantly gain acquaintance of his email address. But that’s not all – you will be able to track your customer’s shopping history and purchase preferences as well. This kind of accurate customer data will be of immense value to you in the immediate future when you start profiling your customers for the purpose of marketing.

Convenient for customers as it reduces checkout times

Providing speedy and efficient customer service is the backbone of a successful business, and every good business tries to gratify its customers by making their shopping experience easy and convenient. Offering mobile payment facilities to your customers not only means that they have one item less to carry to your premises (their wallet, of course!), they also get the added advantage of having their checkout times drastically reduced. At the same time, your employees will get respite from the tedious task of staffing the dreaded register and instead, focus their attention to providing your customer with a better shopping experience.

Foster customer loyalty

Fostering customer loyalty is one of the most crucial tasks of a shrewd businessman. In this day and age, this is becoming an increasingly intricate procedure. Incentives have to be frequently and generously doled out to sustain customer loyalty. Offering a mobile payment facility at the business end of your premises is a novel way to woo your existing customers, not to mention attracting new ones. Also, it is very likely that your business is competing with much bigger corporations. In that case, offering mobile payment services should be a great incentive to your customers to stay loyal to your business.

Make it easier for your customers to manage their payments

Smartphone payment options make it convenient for your customers not only to make payments, but also to organize their credit card transactions. A smartphone, when used as a wallet, presents itself as a digital organizer for all your cards, discount vouchers and more. This kind of organization goes a long way into assisting your customers in managing their money effortlessly and keeping a tab on their purchases.

Information is secure and safer, compared to credit card transactions

While conventional credit card transactions involve swiping the magnetic strip of your card on a card reader, this method isn’t perceived to be very reassuring nowadays. This is mainly because a lot of information is transmitted onto the card reader and, in the wrong hands, this leaves room for card cloning. However, your customer’s credit card information will be much more secure when they opt for a smartphone payment instead. This is because in such an operation, a one-time bar code is generated by the smartphone app for every transaction, and card information isn’t transferred to the seller at all.

Accepting credit cards on mobile

If you are a small business, you will have noticed that many customers have had to decide against purchasing at your premises just because they did not have ready cash. Providing a smartphone payment option will help you cater to those customers.


Notwithstanding all the advantages that smartphone payments offer to both the buyer and the seller, this mode of payment is not without its drawbacks. We discuss a few such disadvantages below.

Accessibility is limited and compatibility issues exist for different brands of smartphones

As of now, smartphone payment apps haven’t been standardized and this means that compatibility issues are very much real. What apps are compatible depends on what phone you have and what operating system is in use on your smartphone. That’s not all – even if the payment app is compatible with your smartphone, it may not be accepted in certain stores. This is because many of these stores may not have the upgraded contact-less terminals in place, and you will end up paying in cash or using your credit card. On top of that, many outlets deliberately refuse to accept payments via smartphones even if they possess the technology to do so.

Costs are high for services such as NFC

From the business perspective, offering a smartphone payment option to your customers is a costly affair, at least at present. This is because NFC-enabled card readers are high-priced, compared to conventional bar-code scanners. Thus, many businesses are shying away from installing such equipment at their premises even though it places them at a competitive disadvantage.

Inducting new technology creates a security risk leading to stealing and misuse of data

Furthermore, a failure to understand the processes involved in data storage and transmission can lead to unwanted security breaches. Almost every other technological innovation pertaining to transfer of money has faced security risks and smartphone payment is no exception. It is not entirely impossible as of now, for attackers to steal information during a payment operation. Also, failing to understand the intricacies of how sensitive information is stored and transmitted can result in unintentional security breaches that can rapidly bring disrepute to your business. What’s more, even if you are able to invest huge sums of money in implementing security measures, it will still make your business less flexible in adapting to changing technology, which in turn will make it less competent in the foreseeable future.

Increasing volume of usage of mobile payment applications might cause performance issues and adversely impact customer experience

Even after a contact-less mobile payment system has been installed at your premises, it may not always guarantee swift transactions. This is especially true when handling large volumes of mobile payments. Such high-volume situations will give rise to performance issues like failed payments. These shortcomings, if not handled on priority, will translate into poor customer experience.


Introducing the latest smartphone payment options to your business involves a series of interlinked steps. We will discuss each process in detail.

How to turn a smartphone into a credit card reader / terminal

To use your smartphone as a card reader or terminal, you will need to acquire two things – a card reader dongle that attaches to your smartphone, and a mobile app. Once installed and correctly configured, you can swipe your customers’ credit cards on the card reader and process payments through your smartphone.

The other requisites

There are certain other requirements besides acquiring a card reader/terminal to accept smartphone payments. They are

Merchant Accounts: Merchant accounts are a discretionary option if you wish to receive mobile payments. In case you do not wish to opt for mobile payments services, you can instead, contact your bank to get hold of a merchant account.

Mobile payment services like PayPal Here and Square: If the old-school merchant account looks too much of a hassle to set up, you can always opt for newer and more convenient mobile payment services like PayPal Here and Square.

  • PayPal Here: PayPal is renowned as the trailblazer of online payment services. PayPal Here takes that legacy forward by offering a mobile payment processing platform that makes it possible for users to accept almost any form of payment. This service is compatible with major smartphone operating systems like iOS, Android and Windows. PayPal Here allows you to accept payments in the form of credit cards, debit cards and even allows you to send an invoice across for future payment. Not only can invoices be sent online in PayPal Here, this service even makes it possible for you to record all transactions made in cash and through cheques. What’s more, PayPal also offers live customer service and processes service requests both through phone calls and via emails. Pricing wise, PayPal Here offers you a simple plan that involves zero setup fees, monthly fees, cancellation fees and processing minimums. Fees are charged per transaction and they are like follows:
    – A fee of 2.7% per card transaction (US)
    – A fee of 3.5% + $0.15 to key in cards
    – A fee of 2.9% + $0.30 to create an invoice
    – An additional 1% fee is collected for every overseas transfer.
  • Square: Square is another mobile payment service that has seen increased popularity in the retail sector in recent years. Although optimized for use on the Apple iPad, Square is also compatible with other Apple products as well as Android devices. Square allows you to not only receive payments but also enables you to track your sales performance in real time. The popular app, Square Register allows you to record all transactions made in cash, via credit/debit cards or any other means. It manages your digital receipts and your inventory, and provides you valuable feedback by generating accurate sales reports. What’s more, with its inbuilt automatic update function, you are relieved of the tedious task of having to manually update the app time and again. Square is meant to be a point-of-sale (POS) application, and is available for download absolutely free of cost on both the App Store and Google Play.

Some other mobile payment options that serve as a good alternative to the usual

  • TouchSuite: TouchSuite is a frontend retail app that allows you to access to multiple payment options. It is primarily aimed at small businesses, and apart from encompassing a easy-to-use mobile platform, TouchSuite lends itself to be used as a competent point-of-sales application. That’s not all, TouchSuite also makes it possible for you to manage client data and supervise future bookings. It also generates a log of sales data and lets you track your sales performance accurately. But the best feature of TouchSuite is that it perfectly integrates with your existing accounting software, thus saving precious time which you would otherwise have to spend in updating your accounting software separately.
  • Flint Mobile: Flint Mobile is a cost-effective mobile payment application. It is unique in that it does not use any conventional card-reading/ card swiping hardware, and instead uses your phone camera to scan card numbers. This not only saves you a lot of money otherwise spent on expensive card reader terminals, but is also much more reliable. Flint Mobile is particularly effective when you are processing a lot of debit cards. A noteworthy attribute of this application is the Sell Online feature, that allows you to directly sell any item from your inventory online.
  • GoPayment: GoPayment is another competitive mobile payment option. However, unlike Flint Mobile, it uses the more conventional card reader terminal, and so it is not very easy on your pocket. Nevertheless, GoPayment offers some clever features – it syncs with other Intuit products such as Quickbooks. Payment plans are flexible and you can choose between a monthly fee plan and a per-transaction fee plan.
  • Dwolla: Dwolla is one of the lesser known mobile payment applications, but it is also one of the most cost-effective, provided your payment processes are uncomplicated. A visible downside to Dwolla is that it requires your customers to have it installed on their smartphones as well. This can prove to be a headache for many customers, since they would have to log on to Dwolla every time they need to make a payment.
  • LevelUp: LevelUp is a mobile payment application that is user-friendly and extremely compatible with other applications, especially POS apps. It is equipped to scan QR codes on your customers’ smartphones. What’s more, LevelUp offers accurate data analytics. For an additional fee, you can also carry out and supervise marketing campaigns for your business. It is highly favoured by businesses that strive to creating loyalty programs for their customers.

Comments are closed.