Seemingly everyone owns a smartphone these days. This assumption isn’t too far from reality. According to Pew Research Center, almost two-thirds of Americans owned a smartphone by the middle of 2015. With ownership continuing to grow, so too are mobile technology capabilities. One such innovation is the ability to use a mobile phone as a method of payment, essentially a mobile wallet. Through a technology known as NFC, or near-field communication, customers only have to hold their phones in front of a payment terminal in order to complete a transaction. A Juniper Research study cites that at the end of 2014, there were 101 million users of NFC payments, which is expected to grow to over 500 million by 2019. For small businesses, tapping into this technology’s users could mean expanding their customer base, increasing visibility, and driving revenue.
The mobile wallet represents more than a new method of payment. For business owners, it’s also a marketing tool to increase brand visibility and consumer loyalty. Popular mobile wallet apps like ApplePay and Google Wallet allow individual businesses to create company apps, through which marketing campaigns can be launched. From loyalty programs to email subscription signups, the app can help businesses maintain their digital presence while targeting consumers. For example, when a person with the company app is near the business, they can receive a notification for a coupon or other incentive and use it immediately. This ability to target consumers so specifically is one of the most valuable tools of a mobile wallet. Additionally, it is a tool of convenience, making your business more efficient and streamlined.
In order for your business to begin using a mobile wallet service, they have to install an NFC-enabled payment terminal. This is the major cost associated with the technology on the business side, totaling $1,000-$2,000 for the hardware, employee training, and software. After installation, service costs are still cheaper than traditional credit card processing fees. For example, users of Apple Pay typically reduce their credit card fees by 10%. Most of these platforms average a fee under 3% per credit transaction.
The rise of the mobile wallet is a trend your business should consider as popularity rises in the future. The advantages from both a financial and marketing perspective are clear, with the major disadvantage being a high initial installation cost. Transitioning from a manual payment method to a digital one may set your small business apart from your competition.