Cashless transactions are becoming the norm in many industrialised nations, prompting small business owners to look for information on how to accept credit card payments on their phones. Fortunately, tech innovators have made it very simple to accept cards anywhere with a mobile device and a mobile reader and/or an app with a mobile point of sale (mPOS) system. If you are a small business looking to accept credit card payments on your smartphone or tablet, understanding the options available to you will help you make the best choice.
Who Can Benefit from Accepting Credit Card Payments on a Mobile Device?
Since the advent of card payments, brick-and-mortar businesses have used physical card terminals to process transactions. However, there are several situations in which mobile credit card processing or an mPOS (mobile point-of-sale) setup makes a lot more sense.
You may be an ideal candidate for mobile transactions if you conduct business at any of the following locations:
- Trade shows
- Art shows
- Food trucks
- Farmer’s markets
- Craft markets
- Direct sale parties
- Direct farm sales
- Client’s home or work location
- Seasonal vendors
- Itinerant and door-to-door vendors
Historically, most of these offsite transactions have been limited to cash-only, filling out payment forms or writing cheques that would later have to be cleared. However, with mobile credit card payments, you can perform all of the transactions on the spot without having to wait for payments to clear. You can also capture impulse buys from customers who didn’t come prepared with cash.
How Mobile Card Readers Work
There are two main options for mobile credit card processing:
- Virtual terminal
- Mobile credit card reader
If you need to process mobile payments immediately, consider using a virtual terminal. Virtual terminals process credit cards through a mobile payment app with a payment link or QR code. Some payment processors, including Unicorn Payment, offer virtual terminals that allow merchants to enter credit card details manually.
The advantage to using a virtual terminal is that you don’t have to wait to have any hardware delivered. However, there are also a few disadvantages:
- Credit card payments processed through a virtual terminal are considered “card not present transactions” and come with higher transaction fees.
- Virtual terminal apps are less secure because you can’t take advantage of chip and e-wallet security features.
- You usually need to be online to accept credit card payments through a virtual terminal.
- Entering card information manually is less efficient than swiping or tapping a card.
Mobile Credit Card Reader
Most small businesses that accept payments on mobile devices do so with the help of a mobile credit card reader. Mobile credit card readers are small add-on devices that allow customers to swipe, insert or tap their cards just like a traditional point-of-sale system except that it’s on your mobile phone.
Swiped Payments with Magstripe
The oldest and simplest debit and credit cards have the customer’s card information stored statically and without encryption in the magnetic stripe. This is frequently shortened to “magstripe”. Mobile credit card payments with swiped magstripe cards are usually processed quickly. However, they are the least secure option because the lack of encryption makes sensitive payment information more vulnerable to theft.
Inserted Payments for Cards with Chips
Officially known as EMV, cards with chips that are inserted into a card reader are more secure than magstripe cards because the data in the chip encrypts the customer’s payment information. Payment via EMV takes a little longer to process than magstripe and you could be held liable in the case of fraud. However, the extra layer of security combined with a customer PIN or signature makes payment fraud less likely.
Contactless Payments with Near-Field Communication
Near-field communication includes contactless payments with a physical card as well as payments between mobile devices using an e-wallet like Apple Pay and Google Pay. In these transactions, transaction data is transferred wirelessly and the transaction is almost instantaneous.
For e-wallet payments, the NFC data changes for each transaction and a customer PIN or fingerprint is usually required—making this the most secure payment option. Tap-and-go cards are the least secure because it’s easy to tap a stolen card. However, tapped payments using a physical card usually have a lower purchase limit. In Europe, the tap-and-go purchase limit was between €12 in Poland to €47 in Denmark in 2019.
Bluetooth-Enabled Mobile Card Readers
If you decide to use a mobile credit card reader (most small businesses do), your provider may give you the option to connect the card reader to your mobile device via Bluetooth and accept credit card payments at a short distance from your phone. While connecting a mobile card reader to your phone isn’t hard (it will plug in either to the headphone jack or the charging port), a Bluetooth connection could be handy if you need to charge your phone or don’t want customers handling your mobile device.
How to Accept Credit Card Payments on Your Phone
So, you’re convinced that mobile credit card processing could help you take your small business to the next level and want to know how to get set up. The good news is that the process is simple, accessible and usually doesn’t take too long to do.
Register Your Business
It might seem obvious, but you need to have a registered business to obtain a mobile card reader. For very small businesses, this could mean registering as a sole trader or freelancer if you haven’t already done so.
Choose a Payment Processor
While mPOS readers were initially popularised by the aggregate merchant account provider Square, there are now several options for small businesses that want to accept credit cards. In fact, mobile credit card processing is now offered by traditional merchant account providers as well as payment aggregators.
To choose the best online payment processor for mobile card payments, find out about the processor’s pricing structure, monthly fees, per-transaction fees, and the merchant services they offer in addition to their global payment gateway. While some seasonal and sole-trader businesses do well with an aggregate processor that only charges per-transaction fees, growing businesses can usually benefit from the integrated merchant services that come with a traditional merchant account.
Get a Mobile Device
Mobile credit card readers work on all the main operating systems, including Android, Apple, BlackBerry and Windows Phone. Some business owners may need to upgrade to a more recent device or may prefer to have a separate device for accepting credit cards. Whichever device you use, make sure that the device and app are secure and locked when not in use.
Order a Plug-In Card Reader
If you decide to go with a mobile card reader, you will need to order one from a payment processor. Many payment processors offer a free mobile card reader when you sign up for their service and others charge a small fee. Before going ahead, make sure that the reader accepts all the card types you need.
Download and Configure the App
To accept mobile payments, you’ll need to download your provider’s app and configure it with the options you want. This could mean adding optional fields for tips and add-ons, adding a field to collect customers’ email addresses and phone numbers and adding an option for the customer to opt-in to receive a digital receipt via SMS or email.
Accept Credit Card Payments on Your Phone and Grow Your Sales
Once you’re set up with a payment processor and a mobile card reader, you’re ready to process credit card payments on your phone! If you have an email newsletter or social media account, let your followers know that you now accept card payments to maximise your potential sales. If you have a storefront, kiosk or food truck, you can also advertise this option visually and start growing your sales.