Mobile Payments Could Fundamentally Change Small Business
In the past few days, mobile credit card payments have been making news. First, Intuit announced a free version of its mobile payments service called GoPayment. Next, we hear that Square raised a very nice funding round:
Square’s general manager Keith Rabois tells us that the company has officially closed its largest round of funding to date, raising $27.5 million in new funding led by Sequoia Capital with exiting investor Khosla Ventures participating in the round.
Conveniently, ReadWriteWeb has a nice summary of the current mobile payment services. That post adds two competitors, Verifone‘s PAYware Mobile and ROAMpay. One competitor not mentioned is ISIS, a venture between Verizon, AT&T and T-Mobile that has not actually launched yet.
Why have mobile payments become such a hot topic? First, you have a founder of Twitter as the founder of one of these services (Square), and now Intuit, a major small business software company, is making a big push. Mobile phone carriers are also trying to get into the industry. Mobile devices are growing at an incredible rate, and the capabilities of these phones is similar to a small PC. That means that payments over mobile phones or using these devices as a credit card processing machine just makes sense.
The other reason this makes sense is the renewed focus on small businesses. This focus started with the realization that social media can help small businesses get bigger without spending a ton of money on advertising. As small businesses moved to Twitter and Facebook, they could build their business one relationship at a time. By removing some of the traditional marketing barriers, that made it clear that selling products and accepting payments was still an obvious hurdle.
There already exist several credit card processing services. First, you could buy Intuit’s QuickBooks software and opt-in for the credit card processing services. The processing fees are similar to the mobile payment services, but it does require that you have QuickBooks and that you can be at your PC at all times. Another solution is using PayPal, which provides reasonable credit card processing for your web site. Obviously, some technical expertise is required to set it up, and many small businesses may not have that expertise or the money to pay for the consulting.
Mobile payment services could solve a lot of problems that small businesses have. Even if you normally have a static physical location for your business, sometimes you will be away for business and still want to process a payment. How easy would it be to take out your phone and swipe a credit card? How impressive would it be to your customer that you can accept payments anywhere you go? Many people would assume that your business is “in the know” and it would further your influence within your customer base.
As an example, look at your local bakery. They have a store that accepts credit cards and cash as you would expect any store to have. Now, what if that bakery is selling their goods at some local competition or even some school fundraiser? Many people have declined purchases at these smaller events because they did not have the cash available or the seller could not accept credit cards. If you business does not have a physical store, accepting payments becomes even more difficult. However, with mobile payment services you could accept a credit card when you make your delivery.
In case you have not figured it out yet, mobile payment services are hot because they can fundamentally change the way small businesses can sell their products.