Small Business Resources is now the Center for Business Empowerment.
September 26, 2023 | 8 minute read
Small businesses have no shortage of big challenges, and consistently meeting customer expectations is one of them. Customers want high-quality products, competitive prices and personalized customer service — and they want them quickly. The prevailing thinking today is “time is money,” and waiting in lines has economic consequences for companies and customers alike. This is exactly why more companies — especially small businesses — are turning to mobile point of sale solutions.
“A mobile point of sale solution combines software and portable hardware to allow transactions to be processed anywhere and can transform any tablet or smartphone into a payment-taking device,” explains - Michael S. Towles, vice president and program lead of Product Management at Bank of America. Using these solutions, you can ring up transactions at a store sales counter, in the checkout line, in a pop-up shop, outdoors or almost anywhere you can find a wireless signal. While traditional POS technology may offer broader analytical and data collection capabilities, the mobile version is not fixed in one location and can move with you to transact business anywhere.
The mobile POS system is very similar to traditional POS, and in some cases, they can work together. For most mobile POS solutions, the user downloads an app onto a smartphone or tablet. A card reader either physically plugs into the device or communicates via Bluetooth. Depending on the payment vendor, however, you may have to use their proprietary portable devices.
But in general, whether a smartphone add-on or a dedicated piece of hardware, these devices may have a magnetic stripe reader to accept card swipes, a chip reader into which a card can be inserted, a near-field communication component that facilitates contactless and mobile wallet tap payments or a combination of these. Dedicated devices may print receipts, while a smartphone or tablet reader can send receipts electronically or work through a fixed POS system to print receipts.
Today’s mobile payment solutions offer increasingly robust business management functions. In addition to processing transactions, many calculate sales totals and taxes and track sales by location, device, employee or payment method. Some also offer inventory tracking functionality and can report on shrinkage, sell-through, stock turnover and inventory. The systems can be set up with individual employee accounts that can be used for timekeeping and analytical purposes, which can be valuable in retail settings. These mobile systems typically generate one report that delivers data in an Excel spreadsheet and allow the user to pick and choose data for analysis.
A mobile POS solution can also be a useful thing to have in your marketing toolbox, as the system can collect contact information to be used for emails and retention marketing. It’s possible to integrate the mobile payment system with a fixed POS system for even greater functionality. And if you’re looking for your mobile payment solution to do something specific, you could enlist a software developer or programmer to create a completely custom solution for you.
"As it turns out, mobile payment solutions are actually very popular among merchants who work on job sites and don’t want to carry another piece of hardware. They already have their phone. This way they don’t have to carry another large piece of equipment."
While a mobile payment system offers small businesses many benefits, perhaps the greatest advantage is the freedom to operate outside of a brick-and-mortar location. With a mobile payment solution, you can conduct business anywhere, which expands opportunities for generating revenue. Vendors or service providers, such as plumbers or cleaning services that work on location, now have more options for accepting credit card or cash app payments.
“As it turns out, mobile payment solutions are actually very popular among merchants who work on job sites and don’t want to carry another piece of hardware,” says Towles. “They already have their phone. This way they don’t have to carry another large piece of equipment.”
A mobile payment solution is typically easy to install and requires little training. Since it runs on iOS and/or Android apps, the design makes the system intuitive to use, which can reduce staff training time. In most cases, a business can have a mobile solution up and running within 24 hours.
Choosing to use a mobile payment solution can also have a significant impact on the quality of the customer experience. With a device in hand, employees have greater flexibility to provide a high level of service. You can answer questions and look up inventory without ever leaving the customer, or work with multiple customers simultaneously and save their purchases in a personal cart. If a checkout line becomes too long, you could use both the mobile and fixed POS systems to accept payments while keeping the store traffic moving.
Having a mobile payments solution can prove invaluable when the unexpected happens. “During a hurricane, one merchant that runs several gas stations throughout Florida had no way of taking card payments and couldn’t sell gas to people who desperately needed it,” says Towles. “They didn’t have Wi-Fi, but they did have mobile service. Because of this, we were able to quickly get them set up with a backup mobile payment solution, and they were up and running — selling gas to everyone who needed it.”
In comparison to the benefits, the drawbacks to using a mobile payment solution are relatively minimal. The greatest disadvantage may be the inability to accept cash, which still requires a register. For customers who want a physical rather than an emailed receipt, an external printer is necessary when using a tablet or smartphone. You should also be mindful that older devices might have operating systems that are no longer compatible with the solution you’ve chosen.
When mobile payment solutions were first introduced, some customers had concerns about security. Now that these systems are becoming mainstream, customers are more comfortable with this form of payment — and with good reason. Almost every solution on the market is compliant with standards set by the Payment Card Industry (PCI) Security Standards Council. This means end-to-end encryption, for example, so customer data is not at risk from hackers.
Transactions are also conducted using tokenization, with merchants processing payments using a token, or string of random numbers, to substitute for an account number. Customer account numbers are never held within the merchant’s system, so if a device is stolen, there is less of a risk of account numbers falling into the wrong hands. A mobile payment solution is also more secure than a fixed POS system in many cases since the payment card doesn’t have to leave the owner’s possession.
The hardware that is used most often is inexpensive. A mobile payment app can be downloaded on your mobile device at no cost, and card readers can be purchased for less than $100. For the service, businesses typically pay a monthly fee plus a per-transaction fee. There may be additional charges for add-on security features or expanded functionality. Merchants typically receive payments deposited directly into their accounts within 24 hours.
There is certainly no shortage of mobile payment solutions providers. As you explore your options, make sure to factor in both your current and future needs. For instance, does the service provider offer multiple channels of support, including a 24/7 telephone support line, online chat functionality and web-based frequently asked questions? You don’t want the headache that comes with losing the ability to accept payments after standard business hours. You may also want to look for service providers that have comprehensive training support, including videos, webinars and in-person options. This can be invaluable for businesses that have high employee turnover, such as restaurants.
It’s clear that mobile payment solutions can offer small businesses significant advantages. They can create new sales channels, enhance the customer experience, provide valuable reporting functions and contribute to the marketing function — all of which can contribute to top-line growth.
To learn more about how a mobile POS solution can contribute to your business, contact Merchant Services at Bank of America.
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