E-wallets and Mobile Payments: Are Small Businesses Ready?
Mobile payments are becoming increasingly popular, as this technology enables people to access instant deals and have a more personal experience in the checkout line. This is something that small businesses may need to embrace in the next year or two.
According to a November report by Aite Group, mobile payments (which includes bill payments) will account for $214 billion in gross dollar volume by 2015, up from $16 billion last year. Sixty percent of those ages 18-34 said that they would be comfortable with using a phone to make a payment at a store.
"There is enough momentum that small businesses need to take that first step" to learn how to best enable their businesses for mobile, whether that's reformatting the business' website or implementing a mobile application, says Paul Phillipson, managing director of Mazooma, in The Street.
Essentially, these mobile payments work by using a chip that's embedded in the smartphone. This chip has all the information related to your account information i.e how much money you have in your account. By waving the smartphone in front of a reader, the retailer can debit the money from your account to their account. This way, small businesses can compete with mobile wallets by electronic payments through the smartphones.
Google announced that it is embracing the mobile payment wallet just last week, and will officially launch Google Wallet later this summer. Just what can Google Wallet do, or will do? It will support multiple cards. It will provision your existing Citi card. It will also work with a Google prepaid card you can fund from anywhere.
It’s a wallet you can lock. There are lots of security features, PINs, encryptions, and the card is never fully displayed on the screen.
San Francisco and New York will be able to use it first, and then it will expand in the coming months. Google is also working with bigger brands such as Macy’s and Subway.
However, there's no need for a small business to jump into this technology right away. The industry is still new, and have some time to wait before implementing a mobile payment strategy.
"For something that is going to be a mom and pop restaurant or dry cleaner, people like that who have a reliable payments system, there is still time to evaluate," said Stephen Burke, vice president of Resource Interactive's mobile practice. "A consumer is still going to buy with a card if the mobile payment is not there."