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Between texting, emailing, snapping photos, and posting on social media, it can feel like your smartphone is an extension of your hand. So it only makes sense that this increasingly indispensable device is evolving into a way to pay for things. In fact, a recent article showed that over 8 million people in the UK will have made at least one proximity mobile payment in the past six months. Here’s a primer on mobile wallets, and why it makes sense for your business to accept these new types of digital transactions.
How do mobile wallets work?
Mobile wallets use near field communication (NFC) to transmit information from your mobile device to a payments reader. In other words, it’s how to make digital transactions with your phone. NFC is a type of radio frequency identification (RFID) technology that allows your smartphone and a payments device to talk to each other wirelessly. That’s why, for obvious reasons, these types of transactions are also known as contactless payments.
What are some examples?
Apple Pay is perhaps the buzziest example of a mobile wallet app so far. Here’s how the mobile wallet technology works: First, open Wallet on your iPhone (model 6 or above), and add the credit or debit card you have associated with your iTunes account by entering the security code. When you’re ready to pay, just hold your finger on the Touch ID button or use Face ID to scan and verify your identity (great for strong customer authentication under PSD2 when it’s fully enforced!). That will initiate the transaction. In addition to Apple, other major mobile e-wallet solutions are Samsung Pay and Android Pay.
What’s the benefit for small businesses?
Beyond the brilliant factor of paying with your phone, there are three key reasons why enabling digital transactions is an ace move for business owners: security, speed, and convenience. NFC transactions are completed in seconds, which is faster than processing magnetic-stripe cards or making change. They’re also dramatically faster than EMV (chip card) payments, which can take longer than magstripe payments to complete. By accepting payments from mobile wallet apps, you can drastically reduce customer wait times at checkout.
Mobile wallet technology is also extremely convenient. It means no more lugging around a wallet stuffed to the brim with credit cards. And if customers happen to have forgotten their wallet, they can still pay for things at your business with their phone’s mobile wallet app.
But perhaps the biggest draw for consumers is knowing that digital transactions with their mobile wallet app are extremely secure. In addition to the fingerprint or Face ID verification that’s involved in contactless transactions like [Apple Pay](https://squareup.com/gb/en/the-bottom-line/managing-your-finances/nfc, the data associated with cards stored in mobile wallets is encrypted and constantly changing — which makes it near impossible for fraudsters to extract.
Right now it’s mostly large retailers that have the ability to accept digital transactions from mobile e-wallets, but that’s changing fast. You can set yourself up to accept mobile wallet technology like Apple Pay by purchasing an affordable NFC reader. Adopting NFC technology is an opportunity to set yourself apart with safe, streamlined payments.
