Why Are Mobile Payments Still a Novelty and Not the Norm?



They’re fast, they’re secure and the public loves them. So why haven’t Near Field Communication (NFC) payments on credit card terminals been enthusiastically embraced by America’s small businesses? The answers might surprise you.

Fear of Technology

Let’s face it: Running a small business is a full-time job. Learning to accept a new payment method can feel like a bad use of resources for time-strapped entrepreneurs.

In reality, making the transition to NFC and mobile wallet readers is generally an inexpensive and quick process that does not involve hours of staff training or long conversations with the folks at your merchant processing company’s help desk.

NFC technology, the innovation that allows customers to pay by placing their phone close to a NFC-equipped terminal to make their payments, can be found in most of today’s smartphones as well as in the current generation of payment terminals. With this contactless payment method, the transaction is encrypted for security and processed within a matter of seconds. A receipt can even be emailed to the customer, saving you money on paper while also providing you with valuable customer contact information.

Security Concerns

Most small business owners are queasily familiar with the credit card fraud and data breaches that have haunted our headlines in recent years. Sadly, it isn’t just the big retailers who fall victim to these criminal activities that focus on the storage or transfer of sensitive customer card data by merchants.

Many entrepreneurs suspect that contactless payment methods cannot possibly possess the built-in mechanisms to minimize the chances of fraud. As a result, they deprive themselves of the advantages of this new technology based on fear of potential loss.

In reality, mobile payments truly are more secure. The process cannot take place unless both parties have near field communication chips. In addition, the customer must input either a PIN or a pre-set fingerprint ID before the deal can go through.

Because all aspects of the transaction are encrypted and tokenized, the merchant has no record of the customer information that criminals have been so successful at plundering in recent years. Instead, the credit card number and expiration date are replaced with a one-time-use token. In this system, the consumer, the merchant and even the mobile wallet provider such as Apple does not see the numbers. Only companies such as Visa, MasterCard and American Express provide the token services that can unlock these keys and reveal the actual data.

The Bottom Line

These days, many major retailers and restaurants are embracing mobile payments with the public’s enthusiastic support. In fact, this payment trend does not seem to be a flash in the pan. The handwriting may be on the wall for many smaller businesses who have thus far been paralyzed by reluctance to change or have fears about exorbitant costs or a lack of security. Mobile payments are here to stay and have the potential to become ever more user-friendly, economical and secure.