How Do Mobile Payments Work?

As a small business owner, you’ve probably already come to terms with the idea that mobile payments are the future of commerce. Today, mobile payments have grown from just online-shopping to paying for restaurant delivery, ride-sharing, coffee-shop purchases, public transportation and more. An Accenture Consulting report reveals that 23% of millennial-borns make at least one weekly payment via their mobile phones.

With options like paying through cryptocurrency and the rise of mobile payments in “under-developed” countries it’s crucial for business owners, whether big or small, online or brick-n-mortar, to leverage the power of this payment option.

Benefits of Mobile Payment Options

  • Mobile payments can be accepted regardless of time/location.
  • They improve customer experience.
  • They speed the checkout process.
  • They facilitate providing customers extras like coupons, gift vouchers and loyalty discounts.
  • They helps integrate loyalty programs and upsell additional products.
  • You can avoid investing in POS equipment/infrastructure.
  • They reduce stationery costs.
  • Some mobile payment processors transfer funds to business accounts within three days, resulting in better cash flow
  • Provides access to relevant, current, customer-oriented data analytics and inventory tracking.

There are potential downsides also. For example, you will have to always have access to a reliable Internet connection.

How Do Mobile Payments Work?

There are primarily five different types:

  • Mobile wallet
  • NFC or contactless payments
  • Direct card billing or premium SMS
  • Near real-time direct transfer between payer and payee bank accounts
  • Card-based payments

Combinations of these are also available.

NFC payments are gaining enormous popularity, with the increased use of smartphones. This method allows two devices, the smartphone and the payment reader, to communicate wirelessly within certain distance limits, usually about two inches.

This is facilitated through use of a specific radio frequency that enables exchange of information to process payments. You will need a merchant account provider in order to get a merchant account and take advantage of this technology.

Some merchant accounts use machine-learning features to analyze and assess suspicious-looking transactions, providing greater security for your business.

For more information on how mobile payments work, or to sign up for a merchant account, please call (888) 924-2743 or go to

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