Using Your Smart Phone to Accept Mobile Payments

For more and more small businesses, the ability to accept payments outside of a traditional retail location offers critical advantages. From limousine drivers to craftsmen to repair technicians, being able to accept credit and debit card payments directly where products are sold or services are delivered can increase customer convenience and merchants' sales.

Because demand is growing to accept payment cards in a wider range of locations, an increasing number of wireless providers, payment processors and card issuers are teaming on products and apps that help merchants and service providers turn their smartphones into payment acceptance devices.

The ability to accept payments wirelessly can offer a number of benefits to small business owners, and can help companies establish virtual storefronts that help them serve customers without having to invest in physical real estate.

Using a smartphone as a virtual payment gateway device allows even the smallest of service providers or merchants, for whom an investment in a dedicated card reader may have not been cost-effective, to safely accept payment cards.

Mobile payment apps are also popular with younger consumers, many of whom would prefer to pay with an app than with cash or a payment card.

Processing Payments

Mobile payment applications take different approaches to how merchants can input payment and sales data in the field. Some rely on merchants punching in a customer's card data into a smartphone browser. Other approaches use dedicated card readers that can be attached physically to a smartphone, or connected via Bluetooth. Merchants swipe the card, as they would with a traditional hard-wired point-of-sale payment terminal.

With both approaches, sales data is sent over wireless networks to the merchant's payment processor for authorization and reconciliation. A browser-based app can send the customer a receipt via e-mail, while a connected device may offer a choice between a printed or e-mailed receipt.

Even in traditional settings, the use of wireless payment devices can offer a number of advantages. In a retail store, sales personnel can accept payments without sending customers to stand in a line. In a restaurant, a payment can be processed directly at the diners' table, without the potential security concerns of a server taking a credit card out of the customer's sight.

Popular mobile payment apps and services include Square, PayPal Here, Intuit GoPayment, PaySimple, and others.

Remote Check Deposit Going Mobile

Another application helping to make smart phones indispensible for small business owners is the expanding ability to deposit checks remotely by taking pictures of the check with your smart phone's camera.

A number of leading banks and online payment services are including remote deposit features in their iPhone and Android apps, and many are developing similar apps for the Blackberry platform.

While specific features may vary from bank to bank, the basic idea with mobile deposit apps is that you can endorse the back of a check, and then take a picture of the document's front and back.

You also enter the amount of the check directly into the app, and the check image is encrypted and transmitted (over either the wireless network or a Wi-Fi connection) directly to your financial institution account.

The primary benefit of depositing checks remotely is that you can save the time and effort of physically going to the bank. Instead of sitting in traffic or waiting in line, you can simply photograph the check and upload it for deposit.

Depositing checks can also speed your access to the funds, depending on your bank's deposit deadlines. Many banks will process checks the same day, if the images are transmitted early enough.

Processing Tips: While mobile remote deposits offer considerable convenience, keeping a few pointers in mind can make the deposit process smoother and more efficient:

  • The brighter and clearer the image is the less chance you'll have that a processing error or delay can occur. Be sure to photograph your check in bright light, and try to avoid having shadows fall across the check. Similarly, make sure the printing and handwriting on your check is clearly visible in the images you transmit for deposit.
  • Make sure you endorse the check before you submit it. As is the case with tax returns, banks say depositing unsigned or unstamped checks is a common mistake (especially for people using mobile remote deposit for the first time).
  • To reduce the risk of duplicate transactions, it's important to segregate checks that you're waiting to clear from those you haven't deposited yet. Similarly, you should destroy paper checks once they've cleared to protect financial data printed on the document and to reduce the risk of identity theft or other forms of fraud.