As a retailer, you know that the days of cash purchases are well on their way to becoming relics of the past such as, carbon paper credit card machines and invoices printed on triplicate.
In the year 2021, you’re nearly as likely to have a customer pay with their smartphone as you are to have someone pull a credit card out of their wallet or purse.
In fact, our recent Retail Comeback survey (methodology below) found that 92% of the small retailers we surveyed have either already implemented mobile payments (67%) or are planning to implement them (25%).
It’s sensible to make it as easy as possible for your customers to shop with you, whether they’re using cash, their credit card, or their phone. After all, would you rather have your store included in the 92% of stores that are accepting mobile payments, or among the 8% that are not?
Mobile wallets are the next revolution in digital payment methods, and in this article we’ll look at what mobile wallets are and how you can make sure that your business is making the most of this new technology.
A mobile wallet is a smartphone app that stores digital versions of your credit and debit cards, along with other forms of currency like loyalty and rewards cards. They can even store tickets for airline flights and live events.
If you have an Android phone or an iPhone, your phone already comes with a mobile wallet. These virtual wallets have platform-specific branding such as Apple Pay, Google Pay, and Samsung Pay. Individual restaurants and retailers, like 7-Eleven and Starbucks, have started offering their own mobile wallets. Walmart’s mobile wallet, Walmart Pay, had more than 6 million active monthly users as of April of 2020.
Mobile wallets use NFC (near field communication) technology to let users make a secure digital payment from their phone. This is the same technology that lets you make a payment from your credit or debit card by waving it over a scanner instead of swiping it. This technology helps make mobile wallets both convenient and secure, since smartphones require a PIN or fingerprint scan to unlock.
You may have heard the term “digital wallet” and wondered how it relates to mobile wallets. While similar, there are important differences between the two.
While mobile wallets live on a mobile device like your smartphone or tablet, digital wallets can live anywhere electronically, such as your computer or even in the cloud. If you store money in an account like PayPal or Venmo, you’re using a digital wallet. In other words, mobile wallets are always digital wallets, but digital wallets aren’t always necessarily mobile wallets.
To accept mobile payments, you do need to have the right hardware in place: it’s not as simple as just updating your software. That’s because accepting mobile payments requires the right NFC technology.
If you’re using a modern, updated point of sale system, there’s a good chance that you’re already able to accept mobile wallet payments, as that feature is becoming more and more standard.
If you have a contactless payment device (a point of sale system that allows customers to pay by holding their card up to a reader or scanning a QR code, for example) you’re probably ready to accept mobile wallet payments.
Here’s a tutorial on how the Square contactless reader works:
Getting started with the Square Contactless and Chip Reader (Source)
You may be asking yourself, “Can’t I just use a cash app, like Venmo or Zelle, to accept business payments on my smartphone?”
While you could technically accept a mobile payment from a customer using one of those peer-to-peer apps, you must first set up a business profile in the app to make sure that the transaction is classified as such for tax purposes and routed through your business account. Accepting a business payment as an individual would be akin to accepting cash under the table.
The benefits of mobile wallets can be summed up into three main areas: convenience, security, and speed. Let’s take a closer look at each of these aspects:
Convenience. Mobile wallets allow your customers to carry less things around with them, and they allow you to handle less cash and paper receipts. This is crucial for retailers who participate in popups or markets and need to be strategic about their payment equipment.
Security. Mobile wallet transactions use a unique, encrypted token (rather than an actual credit or debit card number) for each individual transaction, making them impervious to cyber criminals. They also allow your business to handle less cash, making you less vulnerable to robbery.
Speed. Cash and check transactions are only as fast as the humans who are physically exchanging paper, making change, printing receipts, etc. And that’s not even taking into account how long it takes for the funds to appear in your bank account. Credit card swipes are marginally faster but are still slowed down by signatures and sometimes finicky magnetic stripe readers. Mobile wallet transactions are the best payment method yet devised at keeping your line moving.
The reality is that if you haven’t updated your point of sale system in recent years, you may be unprepared to do business with modern customers. And if you’re not prepared to accept payments from modern customers, you’re going to lose business year after year. It’s either time to update your system or accept the fact that you’re missing out on sales.
Our Point of Sale Buyers Guide can tell you everything you need to know about modern POS systems, from common features and average costs, to recent trends in the POS market.
Once you’re ready to browse POS systems, check out our Category Leaders in Point of Sale to look at 15 top rated systems based on verified user reviews.
GetApp conducted the Retail Comeback survey in June 2021 of 703 retailers to learn more about how they've pivoted their businesses in the area of fulfillment and alternate payment models.
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