Is your business equipped to take mobile transactions and payments? Mobile to mobile payments allow you to complete a transaction with a single tap, making them a convenient option for businesses and their customers. Here’s a closer look at how phone pay works.
What is a mobile payment?
Mobile payments include any transactions taking place through a mobile device. This includes things like mobile money transfers and digital wallets. You can use mobile payment technology for peer-to-peer payments as well as to pay for goods and services.
Rather than paying for your items with credit cards or cash, a mobile payment allows you to complete the transaction completely from your mobile phone. Some mobile payments use third-party apps like Venmo and PayPal, while others use a digital wallet stored on your phone. Using a mobile wallet app, you can store your banking details directly to your device.
How phone pay works
Now that we’ve covered what phone payments look like, how do mobile payments work? This depends on the type of payment you’re making. Peer-to-peer payments involve sending to individuals directly from your bank account using a third-party app on your mobile device. These transactions work due to technology embedded into banking apps. Your recipient will need to have the same app installed on his or her device.
What about mobile transactions and payments in a store? These work with a combination of specialty hardware and mobile wallets. To get started, you’ll need to install a mobile wallet app like Google Pay or Apple Pay. The shop will also need to have the appropriate payments processor set up to accept contactless payments.
Buyers hold their mobile device up to the contactless payment terminal. This allows the two devices to communicate with one another over a specific radio frequency. They pass encrypted payment information to complete the transaction. The funds leave your digital wallet and enter the business’s point of sale system.
Tokenization is another piece of the puzzle when it comes to enabling mobile transactions and payments. When you set up a mobile wallet, details are sent to your issuing bank. The bank replaces these details with a token, a set of randomly generated numbers. This keeps your account details completely encrypted and protected from fraud.
Benefits of using mobile payments
There are benefits of mobile payments for both consumers and businesses.
Additional security: Through features like Touch ID, PIN inputs, and tokenization, mobile payments are more secure than a physical card.
Peer-to-peer payments: P2P payment apps let you pay friends and families with less hassle. Mobile to mobile payments enable cash gifts, bill splitting, and shared payments for utilities without waiting for checks to clear.
Speed: Contactless mobile payments take place within a second or two, making them much faster to process than swiping a card or counting out cash. This keeps the line moving in a busy store.
Convenience: Customers don’t always carry around cash, but they always have their phones available. There’s no need to fish through a wallet or visit the ATM to make a payment.
How to set up mobile to mobile payments
If you’re interested in facilitating mobile transactions and payments, there are a few ways to go about it. The first is to download apps like Venmo that let you transfer money to another account using your phone.
Business owners that wish to accept mobile payments will need a POS system equipped with contactless (NFC) technology. Contactless readers are available from a number of providers including Shopify POS and Square. An added benefit is that you can integrate these POS systems with your existing sales and inventory software, for smoother transactions all around.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.