Small Businesses have been battling with the payments industry for as long as people have been able to write checks. The appearance of credit cards in the mid-1900’s compounded the problem, and the consumer shift towards plastic in the last decade has put a strain on small business owners due to the high cost of accepting credit and debit cards.
The barriers to setting up a merchant account can be high, with annual fees, equipment leases and monthly minimums. It is no wonder that small businesses everywhere have pushed back against accepting plastic for as long as they can. The companies that get hit the most are the ones that do a small number of low ticket transactions, or need to process on an infrequent basis. Fortunately for these businesses, a new business model has cropped up and it fits these needs almost perfectly.
Mobile Processing Defined
Mobile processing is a new form of payment acceptance that utilizes a smartphone and a small device that (usually) plugs into the headphone jack. The device allows a person to swipe a credit or debit card while an onboard application processes the transaction. Using a secure connection, the app sends the credit card information for approval, just as a hardwired point-of-sale terminal would.
Mobile Processing Benefits
Expanded Payment Acceptance
– As noted before, consumers have shifted over the last decade to rely heavily on plastic when it comes to making their everyday purchases. What used to be reserved for large transactions now is used for the smallest purchases. Broadening the forms of payment acceptance allows a small business to expand their client base.
Ease of Use – Many business owners are spread thin with their time and find it difficult to learn a new payment system as well as train any staff. Mobile processing devices are very simple to use for anyone who is familiar with a smartphone. Just plug it in, open the app and swipe the card.
No Commitment – The current leaders in mobile processing technology all provide services that require no contract. This was practically unheard of in the merchant service industry a few years ago, and allows small businesses to try credit card processing on a trial basis. By examining their business before and after, they can determine if it suits their needs without fear of a long-term commitment.
Cost – Mobile processing devices carry what many believe to be the most favorable terms in the merchant service industry for businesses that do small transaction totals or infrequent processing. They typically operate on a pay-as-you-go basis, which means there is only a fee when a transaction actually takes place. No annual fees, no monthly fees and no transaction minimums. Additionally, most companies will provide the swipe device for free.
Top Credit Card Processors for Smartphones
As the industry has grown exponentially in recent months, many companies have thrown their hat into the mobile processing ring. By researching the top Android or iPhone credit card processing companies, small business owners can determine the best for their needs. Here are two of the biggest:
Square Up – While Square Up did not invent the industry, they most certainly brought it out of the shadows and helped mobile processing gain popularity among the masses. Originally designed as a way for individuals to “square up” when they did not have cash, business owners found the value in using their services and quickly became a major contributor to their client base.
GoPayment – A division of Intuit (makers of QuickBooks), GoPayment was formed after the success of Square became apparent, and was marketed towards business owners. With a few more features and dedicated customer service, GoPayment has become a favorite among small businesses across the US.
Eric Stauffer is part of a payments industry watchdog group that reviews and rates merchant service companies. They also assist small businesses in finding reputable companies to work with as well as contract negotiations.