8 Things SMBs Should Consider Before Adopting Mobile Payments

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Consumer adoption of mobile payments seems to have reached a tipping point, with the value of mobile transactions reaching an estimated $9 billion by the end of this year. With 22.6 million people in the U.S. expected to make at least one mobile payment in 2015, merchants of all sizes are feeling the push to start accepting mobile payments. But whether every local business should jump on board is still a matter of debate within the hyperlocal community.

With only 32% of SMBs currently accepting mobile payments, according to a survey conducted by Street Fight Insights and Thrive Analytics, there is still ample room for growth within the industry.

To help local merchants determine whether they’re in a position to benefit, we checked in with industry experts. Here are their opinions on what SMBs should consider before agreeing to accept mobile payments. (Also see How Vendors Can Persuade SMBs to Accept Mobile Payments)

1. Is your customer base ready? “Businesses should consider their customer-base and industry landscape. If they have tech-savvy consumers, accepting mobile payments may be an update to consider sooner rather than later. The same is true for businesses that have competitors who are already accepting mobile payments. Businesses don’t want to be seen as behind the times or lose customers because they fail to be digitally competitive, but rather should aim to be seen as ahead of the curve.” (Harry Hargens, Cayan)

2. Are you a high-volume merchant? “All types of business benefit from mobile payments, since more interaction with a customer is what all retailers strive for. Of course, high-volume merchants stand to gain the most, since even marginally faster transactions allow for a better customer experience. In addition, all merchants should recognize that as consumer demands and security concerns increase, they’ll need to adopt the latest technology.” (Norm Merritt, ShopKeep)

3. Do you manage a quick-service restaurant? “We have seen the highest level of adoption of mobile payments systems in quick-service restaurants (QSRs), such as coffee or sandwich shops, as the benefits of mobile payments are especially applicable to their point of sale experience. For example, QSRs often face tough competition, and mobile loyalty programs are an effective way to build and maintain the loyal following they need. Also, QSRs benefit from moving customers more quickly through check-out during busy periods.” (Harry Hargens, Cayan)

4. Can your customer experience be improved? “Mobile payments make sense when mobile can help provide an experience that is 1 to 5 times better than paying with plastic or cash. This can be achieved by offering integrated loyalty, coupons, offers, personalization, and/or a VIP experience. For merchants, mobile needs to provide a way to provide better services and lower operating costs.” (Nick Nayfack, Vantiv)

5. Would you be better served by other digital payment options? “Service-based businesses or marketplaces may not see the utility of accepting mobile payments for a few years. Those types of businesses would be better served by digital payment options that speed up their collections and payouts while lowering costs vis a vis traditional options like checks and ACH.” (Jay Bhattacharya, Zipmark)

6. Are speed and mobility important in your industry? “Mobile payments benefit SMBs who need queue busting (such as, high volume electronic stores, eateries and ticket sales), have out-of store sales (such as, taxi cabs, plumbers and service repairmen), or are themselves mobile (such as, food trucks, physical therapy, or home delivery). SMBs who differentiate themselves on consumer experience are making the move to mobile payments.” (Chris Poelma, NCR Silver)

7. Does mobile add value? “If there is value in using mobile, like for airplane tickets, then it is worth rising to the challenge. Ultimately, if the mobile payment isn’t tied to activity that reduces costs or increases consumer spending on a large scale, then it may not be an optimal candidate. This ROI model transcends mobile and should be applicable across all new products, as mobile is just another channel for commerce.” (Nick Nayfack, Vantiv)

8. Do you need a competitive edge? “Regardless of industry or market, businesses in highly competitive segments can strive to win and retain more customers with the convenience and user experience of mobile payments. Much like customers now will opt out of cash-only establishments for ones that accept credit cards, customers could soon choose the comparable business that offers mobile payments because of the speed and ease of use. At the end of the day, however, SMBs need to weigh the initial buy in costs versus the potential return of increased revenue streams.” (Jay Bhattacharya, Zipmark)

Interviews have been edited for length and clarity.

Stephanie Miles is a senior editor at Street Fight.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.