By Michael Koploy
ERP Analyst at Software Advice
According to US research advisory Gartner, mobile payments may be the next “big thing” for retailers. The firm expected 38 percent growth of mobile payment users last year, totaling 141 million.
While this may seem like a lot, the industry still has a long way to go and there are a number of roadblocks ahead, according to Sandy Shen, Gartner Research Director. “The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards,” says Shen.
Retailers can play a large role in changing user behavior, and the first step is learning more about the technology. Software Advice often hears from retailers that are curious about mobile payments, so they put together a FAQ. Here are answers to three of their top questions.
(1) What does a retailer need to do to accept mobile payments?
Outside of the other requirements for retailers to accept credit card transactions — merchant account, payment gateway, point of sale software, etc — retailers will need either an integrated NFC credit card machine or standalone NFC receiver. Standalone receivers are often much cheaper — sometimes as little as a couple hundred dollars.
(2) How much will mobile payments cost the retailer?
The interchange rate for mobile device payments is the same as MasterCard PayPass and Visa payWave; the rate is higher for these transactions than for traditional swipe-and-sign payments. Visa lowered rates to spur NFC in Italy–it could do something similar in the US, but this is unknown at this point.
(3) What should a retailer do to prepare for mobile payments?
All of the individual players in this ecosystem–from the financial institutions to the consumers–are playing a game of wait-and-see. Retailers can do well by staying on-top of NFC-related news and testing out similar technologies available today (e.g. Google Places), as well as other NFC happenings in the community, (such as the recently announced McDonald’s NFC awareness campaign in the UK).
For a full list of the top ten FAQs, check out Software Advice’s Mobile Payments: FAQs for Retailers.