Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.
Mobile payments are regulated transactions that take place through a mobile device. Instead of making on-site purchases cash, cheques, or a physical credit or debit card, mobile payment technology allows users to make payments digitally with secure applications on which the user’s payment information is stored.
Mobile payments can be used in a peer-to-peer context or for paying at a brick-and-mortar business. In a peer-to-peer mobile payment, you could be making an e-transfer via your bank to pay a friend back for dinner or someone on Gumtree for a piece of furniture. In a mobile payment at a brick-and-mortar business, you’re using an app on your mobile device—instead of cash or a card—to pay for specific goods or services at the checkout counter. In this instance, the business would need a specific type of point-of-sale device (which we get into below) to process the transaction.
Mobile payments have become extremely popular in the UK. A 2022 report by Lloyds Bank demonstrates that 20% of respondents cited mobile payments as their preferred option for in-person payments. Moreover, contactless payments (including mobile payments) that used Near Field Communication (NFC) accounted for 87% of face-to-face payments made in the UK.
What is a mobile wallet?
A mobile wallet is essentially a digital wallet on your phone. In a mobile wallet app, you can securely add and then store the bank details associated with your debit or credit card (some mobile wallet apps allow you to add more than one card). So instead of using your physical card to make purchases, you can pay via your mobile device.
If you want to accept mobile wallet payments at your business, you need to have a point-of-sale system that’s equipped with the technology that can process the transaction.
Mobile wallet technology
The technology that underpins mobile wallet payments is known as NFC or near field communication. This enables a mobile device and a card reader to communicate wirelessly when close together.
Typically, a mobile device has to be two inches or less from a reader to process the payment.
NFC is a subset of something called RFID (radio-frequency identification), a technology that allows us to identify things through radio waves. RFID is nothing new—it’s been used for decades for things like scanning items in grocery shops and luggage on baggage claims.
Contactless payments have gained significant traction, and more businesses are beginning to accept this secure form of payment.
Mobile wallet adoption
From messaging to transportation apps to health monitoring, we’re using our phones more and more to take care of day-to-day life. So it’s no surprise that we’ve seen a proliferation of mobile payments apps in recent years.
The coronavirus pandemic, and the inherent hygiene risks of handling cash, have exacerbated the UK’s transition to a cashless society. While contactless payments may account for a majority of face-to-face payments, the use of mobile wallets accounts for 22.7 of these according to Statista as well as 35% of online payments.
Mobile wallet companies
There are a variety of companies that offer mobile payments apps. But the most popular are Apple Pay (Apple’s mobile payments solution) and Google Pay. On the merchant side of the equation, Square offers a payments processor and system that can accept mobile payments.
All you need to start accepting Apple Pay and Google Pay at your business is Square’s mobile payment reader and your mobile device. (Check here to see if your device is compatible—most new iOS and Android models are).
Google Pay (pictured) is another type of mobile NFC payment.
What are NFC mobile payments?
NFC, or “contactless,” payments are payments that occur in person between a mobile device and an equipped payments processor. To make a contactless payment, you need to have a mobile wallet app on your device, or use a contactless-enabled credit or debit card (learn how to check if your card is contactless enabled here). And to accept an NFC mobile payment at your business, you need a payments reader (like the Square Reader).
Contactless payments are as secure as EMV chip card payments but have some upsides when it comes to usage and speed.
Below are the most popular examples of NFC contactless payments and how to start paying with them. (To learn more about NFC, read our in-depth guide What Is NFC? Everything You Need to Know About Near Field Communication.)
Apple Pay
Apple Pay works on the iPhone (version 6 or newer), as well as the Apple Watch. To pay with Apple Pay, add any debit or credit card to the Wallet app on your device. When you’re at a shop that accepts Apple Pay, hold your iOS device over the payments reader while holding your finger on the Touch ID button.
If you are using a phone with Face ID or an Apple Watch, you can either unlock the phone using your face, a passcode or in both cases, double-click the side button to activate the unlock feature. (this adds another layer of protection).
If you are a seller setting up Apple Pay, you will need a Square reader enabled for NFC. Customers can also pay online through a checkout page using the “Buy With Apple Pay” Button. If you run an online shop, you can accept Apple Pay through your app or website without a reader.
Google Pay
Google’s mobile wallet technology, Google Pay, is available on all NFC-enabled devices that run Android version 4.4 or later. To use Google Pay, open the app on your phone (which requires the user to have a secure lock screen) and complete the transaction by holding your device over the payments reader.
Contactless cards
Some credit and debit cards are enabled with contactless NFC technology. To check if your card is contactless-enabled, look for the wave-like logo printed on the front or back of your card. To pay, hold your card over the payments reader until you hear a beep.
How do mobile payments work?
To pay with your mobile device at a shop till, hold your device close to the NFC-enabled payments terminal. The reader should be within 2 inches of the source (mobile phone) to set the transaction in motion. Since there’s no physical contact between your device and the payments reader, mobile wallet payments are often referred to as contactless payments.
What’s happening in a mobile wallet transaction is that your device and the NFC-enabled point of sale are essentially talking to each other. Using that specific radio frequency we talked about, they pass encrypted information back and forth to process the payment. This all takes just seconds. Speed is one of the coolest parts of NFC payments. They take a fraction of the time of magstripe and chip card transactions—and are leagues faster than cash.
Using mobile payments is simple and secure.
There’s also something called tokenization at play in a mobile payment transaction. Tokenization is part of why mobile payments are so secure, as the technology safeguards your bank details in mobile payments apps. Let’s take Apple Pay as an example. Here’s how it works: After you take a picture of your credit card and load it into your iPhone, Apple sends the details to your card’s issuing bank or network. The banks and networks then replace your bank details with a series of randomly generated numbers (the token). That random number is sent back to Apple, which then programs it into your phone. This means that the account details on your phone can’t be cloned into anything valuable to fraudsters.
How can I accept mobile payments at my shop?
To accept mobile payments at your shop, you need to get a point-of-sale device that’s equipped with NFC technology. This doesn’t have to be expensive. Square’s Reader is just £19 + VAT.
Once you get your Square mobile payments reader, it’s super-easy to start accepting Apple Pay and Google Pay right away. All you do is ring up a purchase, look for the green light to appear on the reader, and then have the customer hold the phone over the reader to pay. The whole transaction is completed in just seconds.
How to use Square’s mobile payment system
Purchase Square’s Reader. You can learn more about setting up the Reader here.
Download the Square Point of Sale app for iOS or Android.
Ring up your customer in the Square app. When it’s time to pay, your customer can hold their mobile device near (within 2 inches) of the reader to complete the transaction.
Receive your deposits as soon as the next business day with Square Instant Transfers. Square sends payments directly to your bank account in one to two business days.
Why use mobile payments?
On the peer-to-peer side of things, using mobile transfers allows you to forgo the hassle of cash and checks, and get paid quicker. And for in-shop purchases, mobile payments are the best solution for several reasons:
Speed and convenience are also strong reasons you may want to consider accepting mobile payments at your business.
They’re fast
Mobile contactless payments are by far the fastest way to pay. Usually, they take about a second. They’re a bit faster than swipe payments, and much faster than EMV chip payments, which are sluggish. And for businesses that have checkout lines (retailers), contactless payments will become much more attractive as they can move the line faster (which means more sales in a shorter amount of time).
They’re convenient
People are carrying around cashless and increasingly have their phones at the ready. This combination makes mobile payments the most convenient way to pay. There’s no having to go to an ATM to pay someone back—you can do that by sending an e-transfer through your bank’s app on your phone. And there’s no need to dig into your bag for your wallet at the checkout counter—you can just tap your phone to pay.
They’re secure
Mobile payments have multiple layers of dynamic encryption, making them an extremely secure way to pay. They’re far more secure than magstripe payments, and just as secure as EMV chip card payments. In fact, if you’re using a mobile payments app with Face ID (like Apple Pay), it’s arguably more secure than an EMV chip card payment.
Here are a few other ways accepting mobile payments helps businesses.
The future of mobile payments is bright. Now is the time to future-proof your business.
The Future of Mobile Payments
Mobile payments have revolutionised the way businesses are thinking about payment processing. On one front, we’re moving toward more secure, authenticated ways to process payments. And on another, we’re moving toward faster, more convenient ways to pay. Brands like Starbucks have created apps that allow you to save payment information and favourite products, so you can refill a prescription or order your favourite coffee drink with the tap of a button.
Mobile payments check both of these boxes, and therefore are where everything is headed. To accept NFC mobile payments (as well as EMV chip cards) at your shop, order the Square Reader.