The jump in mobile apps over the past two years has been so fast it’s dizzying. Third party developers opened up the market to a whole new world and finally MC/Visa loosened up once the security was proven. Enter the Mobile Payments, or the ability to take credit cards on your phone.
A great boost to hobby merchants, trade show hoppers, and micro merchants, it is really, finally here. Right now Wal-Mart is in the midst of moving to this type of payments in their stores with all floor managers having a smart phone and the ability to swipe cards to speed you out the door with a roll out as early as later this year. The first thing people should understand is that it really is safe to use this to transact their business. Seeing large retailers like Wal-Mart use it daily will boost public confidence quickly. The second is that their really is nothing special to it and ANY provider that can get you a credit card terminal can get you processing on your smart phone. A woman I know recently assumed I had left my entire industry because, “everyone is now doing it on their phones.” I wanted to explain that just because you could take a picture of your check and deposit it over a mobile app did not mean every bank in the world was closing, but decided not to waste the time. Phones are just another avenue of speeding up business just like when copiers were added instead of carbon paper, and then faxes instead of messenger services.
The third item of interest is expense. You can have a regular retail merchant account on your phone that will cost you around 1.61% and up and $0.18 per transaction just like at the counter of your business. This is great for cloning your methods of accepting payments. However, if you get a Pay-As-You-Go account like the famous Square, you will be paying around 2.75%. That’s fine if all you do is go to a trade show every few months and run a few hundred dollars, but if you are a full fledged business and process $2,000 a month or more you are paying through your nose, ears and both tear ducts.
Finally this is all leading to what is called an e-wallet. This is where you will have your credit card and debit card as an app on your phone instead of making your wallet 6 inches thick with cards. Now a lot of people right now are rolling their eyes and saying, “…yeah, yeah and we are going to get flying cars any day now.” But think about it. How many people really carry cash? Why would they? My debit card is all the cash I need. How many times have you refused to change a boring program because you couldn’t find the remote? Ease of use makes a demand the ease. The e-wallet is simply the next step.
Here’s the gist of it: just like how your smart phone has mobile banking, your e-wallet will allow you to hold up your phone when asked for payment. Then you either enter a security code like a PIN number, or the coming biometric thumb scan. Europe has been using electronic versions of these in differing ways for a few years. A popular item is the octopus which is basically a reloadable gift card without the card. One octopus watch for example could store a $1,000 and all you had to do was swipe it in front of a smart card reader (smart cards have a small chip inside of them instead of just a magnetic strip). Once your balance was low, you could transfer over more loot onto it and spend, spend, spend all at your wrist. You never reached to a purse or bill fold. So named the octopus after the creature that many pundits have used to describe capitalism over the years for its outstretched arms that want to grab everything.
It seems like it is rushing fast, and it is. For one reason: every one wants to make your life easier so you will use their products and don’t hesitate to spend money (in any form) at their stores.