A bit of background
Mobile point of sale (mPOS) payment systems are part of a new breed of innovative payment solutions for businesses and consumers. mPOS allows businesses to accept payments using cloud based systems, operated via mobile phones or tablets. Consumers can also use payment apps to send money via mobile wallets, providing a secure way to pay for goods and services without carrying credit cards or cash.
Traditional payment processing systems require significant set up costs, the installation and maintenance of expensive payment terminals (cash registers), limitations on the layout of the workplace, and a reliance on a third party provider to manage the system.
Conversely, mPOS addresses every aspect of payment processing and puts the control back in the hands of the business owners. Small to medium businesses get access to data and insights normally reserved for big businesses with budgets to match, the chance to be at the forefront of technology in the commerce sector and, on a practical note, much greater choice in the location of payment points. In fact, businesses using mPOS don’t need to be limited to static payment points at all.
The first mPOS systems began springing up in the 2000s, starting a revolution in payment processing and opening up the market to new providers. Existing payment providers such as PayPal and WorldPay dominate the market, but the growing mPOS industry has also proved fertile ground for new start-ups such as Square and Loop, profiled later in this piece.
Below we explore some of the key benefits of mPOS for small businesses.
Get a payment solution quickly and simply
Because mPOS systems run from phones or tablets, all you need to get set up is a device and an internet connection. This is a whole different ball game to the equipment, installation and training needed to set up a traditional point of sale system. This removes one of the potential barriers many small or mobile businesses face in the earliest stages.
Accept non-cash payments, no matter your size and set up
The set up costs of an mPOS system are significantly lower than a traditional system. This means that new or very small businesses that haven’t previously been able to accept card payments can get set up with an outlay of only a few hundred dollars or pounds, including the cost of a mobile phone or tablet to manage payments from.
If you are a sole trader or run a mobile business an mPOS system will let you take payments on the go, and on the spot. No more invoices, no more chasing clients for late payments. This style of payment processing is particularly well suited to mobile business owners such as private taxi drivers, travelling personal trainers, tradespeople like electricians and decorators, market stall holders and so on.
Mobile businesses face challenges around being able to accept card payments, meaning they have to carry large amounts of cash around – an unwieldy and not particularly secure solution – and may lose customers who can only pay with a card. Accepting cheques as payment or providing invoices often results in a delay for payment of goods and services, and opens small business owners up to the risk of disputes over unpaid bills. This may raise legal costs at a time when the business owner is already out of pocket.
With a simple mPOS system in place, these business owners no longer lose out on non-cash custom, delays on receiving money are eliminated, transactions are more secure and the potential for disputes is heavily minimised.
Run a small business with big business insights
Many small to medium businesses can’t afford to invest in expensive payment solutions, and this also limits their access to invaluable data that could be key to the business succeeding. Not only does accurate and insightful consumer data let you improve your service in real time, it gives you a data lead basis on which to make smart decisions about how to grow your business long term.
mPOS has the potential to be extremely empowering for small business owners. The consumer data available could include seasonal, weekly or daily trends in customer behaviour, stock level monitoring, and the ability to assess needs around staffing levels. All this allows small business owners to make quick, reactive decisions to improve business performance in the short term; as well as providing the insights needed to make longer term decisions that could make or break the business’s potential growth.
Imagine a café owner monitoring in real time how the popularity of different products is affected by weather. After seeing an increase in hot chocolate sales when it rains, they stick a hot chocolate and cake offer in the window on the next wet Saturday. The café fills up and hot chocolate sales go through the roof. Not only can the business maximise on sales of certain products based on what they know about buying trends, they can also use information like weather forecasts to predict which stock levels to increase in a given week or month.
This is a basic example, but small and large scale insights of this type can make a tangible difference to how effectively a business is run. Data is the missing link that lets small businesses make informed decisions in the same way big businesses do, rather than relying on intuition and gut feelings. mPOS makes this data available to small businesses, for the first time, in an affordable, reliable way that they can use however suits them best.
Below we profile a few providers of mPOS solutions. Square is an established provider that has worked with big businesses including Starbucks and Whole Foods Market in the US. Loop is an alternative payment provider currently establishing a strong foothold with consumers in the US market. Finally, Barclaycard Business, a member of the UK based Barclays Group, has just launched their own mPOS service to rival established providers like PayPal, WorldPay, Square and others.
Square Inc. launched in the US in 2009 and now serves customers in the US, Canada and Japan. Despite being a smaller provider than established giants like PayPal and WorldPay, Square has made a big splash in the mPOS industry through partnerships with large brands including Starbucks and Whole Foods Market.
Businesses using Square to take payments receive a free card reader which can be plugged into the audio jack of a phone or tablet. Then, using the Square app, businesses can accept card payments on the go from anyone. There is also a Square app for consumers, allowing users to set up a mobile wallet – eliminating the need for a card to be present when making a transaction.
Square takes a flat 2.75% on every transaction, meaning there are no set up costs (aside from the cost of a phone or tablet) or regular fees beyond the standard charge for every card swipe. Although this rate is higher than many traditional payment providers like banks, the lack of set up costs makes Square very financially efficient and highly accessible to small businesses in particular.
Loop was founded in 2013 and offers a slightly different take on the mPOS revolution. Loop provides users with a fob for their mobile phone, which essentially turns a user’s mobile into a card payment terminal. The Loop fob stores users’ card information and forces card terminals to think a card has been swiped, so that consumers can leave cards and cash at home.
Loop’s technology is aimed more at consumers than businesses, but it is indicative of the changing landscape of payment solutions. Keeping a close eye on consumer uptake of services like Loop will help businesses understand what customers want, and which styles of payment most appeal to them.
To stay ahead of the likes of PayPal, WorldPay and Square, Barclaycard Business has just launched their own mPOS system, called “Barclaycard Anywhere.” This allows businesses of all kinds to take payments securely, wherever their staff may be. Using a secure pin entry device attached to a smartphone or tablet, Barclaycard Anywhere accepts card payments from any UK location securely, using chip and PIN technology. Its advanced reporting system even lets users track their transactions wherever they are, via their mobile app or secure online portal. This gives instant, visual access to payments trends, sales performance and other crucial business intelligence. Payments made using this device are processed through the Barclaycard app using a 3G or WiFi connection. This is especially important for businesses that don’t have a fixed location.
mPOS is a growing technology that holds massive potential for small to medium sized businesses. Using mPOS drastically reduces the set up costs for payment solutions, and affords SMEs free access to data that would normally only be available following significant investment with an expensive provider.
At the moment it’s a race to see which mPOS providers can develop the most efficient, effective and popular platform – one which gives businesses and consumers exactly what they want in terms of security, convenience and growth potential.
Existing payment solution providers like PayPal, Ingenico, Verifone and traditional banks have a secure, trusted foundation on which to build out their product offerings. Start-ups like Square and Loop offera fresh perspective but as yet have no proven track record. Ultimately, it will be the providers with most useful, most trustworthy solutions that consumers will choose.
If you run or are starting a new small to medium business, mPOS could be the solution to your payment provision needs and provide you with essential knowledge and tools to grow your business in the future. So check out the options and see whether the mPOS revolution could take your business to the next level.
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