man paying with credit card wirelessly
Unlike a traditional payment terminal, which may be hardwired into your building’s network, your mPOS relies entirely on Wi-Fi for internet connectivity. — Getty Images/PavelVinnik

Small businesses are already expected to accept credit card payments. Now, the expectations are going mobile.

A 2018 Pew Research study found that 29% of adults say they don’t make any cash purchases in any given week. The pandemic and change shortage further accelerated the use of credit card payments at the point of sale.

Today, credit card purchases make up 82.1% of all in-store retail transactions. And there’s a new kid in town the past few years that’s making it even easier for small businesses to accept credit cards: mobile payment options.

Mobile point-of-sale devices (mPOS), which include wireless devices such as smartphones or tablets that accept credit card payments without pricey POS systems, are expected to account for nearly 25% of all POS transactions by 2023.

From the consumer’s point of view, it makes little difference whether you process their credit card payment through a secure credit card terminal with swipe and dip capabilities or through a mobile device.

But for your small business, accepting mobile payments could mean increased convenience, lower costs and an increase in sales from customers who prefer to use credit cards for their transactions and will choose retailers who provide that option.

Before you jump into accepting mobile payments in your brick-and-mortar business, however, here are a few things to consider.

Decide whether you want to use a merchant account or payment aggregator

In general, there are two ways you can accept credit card payments: by setting up a merchant account or using a payment aggregator. A merchant account is an account you’ll set up through a bank so you can accept online payments.

In contrast, a payment aggregator is a third-party processor that will process payments for you. There are advantages and disadvantages to both options.

Merchant accounts are more cost-effective in the long run and tend to be more stable. If you go this route, you don’t have to worry about unexpected account holds. However, a merchant account is also more time-consuming to set up.

A payment aggregator is easy to set up so you can start accepting payments right away. However, the fees tend to be more costly and the company can put a hold on your account if they suspect any fraudulent activity.

Determine what kind of hardware you’ll need

Purchasing hardware is one of the most expensive aspects of accepting mobile payments.

First, you’ll need to consider what kind of accessories you’ll need. Some mPOS systems will work directly from your smartphone, which can be handy for merchants who frequently attend vendor fairs or street fairs making in-person sales.

But you still may want technology to print receipts, in case customers would prefer not to have their receipt emailed or sent via text to their smartphone.

If you have a brick-and-mortar store or restaurant, you might prefer to conduct transactions via an iPad or tablet. You will need a chip reader, as well, which is an attachment to an iPad that works much like a standard POS credit card terminal.

Credit card swipers may be provided free from your payment processor, but if you don’t provide technology for EMV chip transactions, you could be opening yourself up to the liabilities of credit card fraud, as well as fines and penalties.

Not every mPOS system is created the same. Some have added features that can make running your business easier.

Select a reliable internet provider

Reliable internet access is the lifeblood of smooth mPOS transactions. Unlike a traditional payment terminal, which may be hardwired into your building’s network, your mPOS relies entirely on Wi-Fi for internet connectivity.

You may be able to process transactions “offline” and then transmit all the data once you have a Wi-Fi connection. But then potentially fraudulent or over-the-limit transactions won’t be flagged until you connect your device to the network. Again, that’s setting you up for credit card fraud, chargebacks and potential fees.

Instead, you’ll want to ensure your permanent location has solid and reliable Wi-Fi to process transactions.

Similarly, on-the-go vendors who attend trade shows, fairs or events may want to invest in a mobile hotspot from their cellphone provider. It’s often challenging to get a solid internet connection at an event with thousands of attendees. And smaller fairs may not offer Wi-Fi capabilities to vendors at all.

If you invest in a hotspot, make sure your connection is secure. This can help protect your customers’ data and also prevent other vendors from tapping into your connection to process their own mobile sales.

Consider extra features you might need

Not every mPOS system is created the same. Some have added features that can make running your business easier.

Depending on your state and region, transactions may be subject to state or local sales tax. Most mobile card readers have a function that automatically calculates sales tax for the customer.

Depending on your business and industry, you may want an option for customers to add a tip to their purchase digitally.

Some mPOS systems include the ability to capture information and store it in a customer database. Many come with proprietary accounting software or inventory management capabilities and many integrate with your other business software and apps to streamline accounting and inventory. Consider the features you need before investing in an mPOS.

Most importantly, you want to make sure that any solution you choose is secure, improves the customer experience and keeps your overall costs low. You can save significant amounts of money and gain the flexibility to process payments in a variety of locations by investing in an mPOS.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published June 23, 2021