Are Physical Wallets Close to Extinction?
August 31 2016 |
How smartphones and apps are changing the way we pay
As a business owner, by now you’re likely aware of mobile payments (cue thoughts of iPhones and contactless exchanges of money in some distant “cloud”). Maybe you’re currently accepting payments in this manner. But what would you say if a client asked you how their mobile wallet on their smartphone works? How secure is mobile payment processing? And will physical wallets go the way of the dodo bird once more people start paying with their mobile devices?
If you’re still on the fence about mobile payments, you’re not alone. According to a 2015 Federal Reserve survey, 28% of all U.S. smartphone users have made a mobile payment, but that number is rising fast. Adoption rates are steadily growing and by 2020, mobile payments usage is expected to climb to 90%! It’s clear to see that paying via smartphone or tablet will soon be a part of our daily lives, so let’s break it down into the basics.
How do mobile payments work and is credit card information safe in “The Cloud”?
Mobile payments and digital wallets go hand in hand. Your clients input their credit or debit card information into an app and essentially create a virtual version of the card. They can then make purchases at your store by holding their phone over a compatible, NFC-enabled terminal and confirming payment with a fingerprint or PIN code. Simple enough, right?
The next question is, how safe can it possibly be? You are storing very sensitive financial details in an app, after all. While most people assume mobile payments are unsafe or simply not safe enough, digital wallets are actually SAFER than the plastic cards carried in their physical wallets. You see, these apps use a conversion process called tokenization to protect your account info, so it is never stored by third parties and can’t be decrypted by hackers. This makes digital cards extremely secure.
So you’re coming around to the idea of mobile payments, but what are the options?
There are lots of payment apps out there: some for specific types of smartphones (Apple Pay and Android Pay type applications) and some that only work in a certain store (like Walmart Pay). Then there are apps you’re already familiar with such as PayPal’s app where you “check-in” at a store to pay (but it’s so confusing no one can figure out how it works). Since there are only a few that are widely accepted, let's take a look at the top 3:
The most public and widely adopted mobile payment platform, Apple Pay is available on recent Apple devices (iPhones, iPads, Apple Watch). Apple Pay has deals with Disney, Macy’s, McDonald’s, Best Buy, Walgreens/Duane Reede and many more. Apple Pay uses NFC (contactless) technology. Based on the latest encryption standards, payment data is kept private in the smartphone’s "Secure Element", providing piece of mind for your customers while protecting your business from fraud.
Samsung Pay is the most versatile of the current mobile wallets because it can be used not only with NFC compatible terminals but on any terminal with a magnetic stripe card reader. This means that Samsung Pay users can use their smartphones to buy necessities (like chocolate!) almost anywhere that accepts plastic cards.
Owned by Google, Android Pay can be used on any NFC compatible terminal and for in-app purchases. Many large retailers, some vending machines (handy for that mid-afternoon pretzel fix) and most mobile phone carriers accept Android Pay.
Is your business ready to accept mobile payments?
Pivotal Payments’ high tech range of terminals is fully compatible with mobile wallets. Our future-proof payment solutions mean you can add the latest technology to your business at the most affordable prices, today. So the next time your clients shop at your store, they’ll be able to pay using their virtual card. Before you know it, more and more customers will be choosing this secure and convenient payment option.