With the recent introduction of mobile pay services like Apple Pay and its premature competitor, Wal-Mart Stores’ CurrentC, many small business owners have found themselves wondering if it’s time to start investing in technology a little further from the norm, albeit based in a near field. NFC technology could make purchases smoother and quicker than ever, but don’t toss your Square card reader in the bin just yet.
Mobile Pay Options and Support
According to professionals at Business Insider, mobile pay services like Apple Pay could effectively “kill” the credit card. They’re easier, more secure for the most part, harder to steal, and allow shoppers to feel like the future has finally arrived. However, right now the technology is facing a number of issues. The largest of these is the lack of support from both retailers and banks nationwide: Apple Pay is still new to the scene, so a lack of support from these banks makes some sense, but lack of retailer support is particularly troubling. This doesn’t mean that a particular store doesn’t want to accept Apple payments specifically; it means that they aren’t accepting any NFC payments at all. While this is likely to change over time—Google Wallet has already helped to alleviate a great deal of concerns, as most users trust the big G at least as much as the father of the Mac—the chances of NFC payment technology hitting the mainstream within the next five years or so are looking grim.
Another issue is specific to Apple Pay, and is part of the age old OS war. Apple Insider reported some impressive figures in January 2014 for iPhone use, claiming that up to 42 percent of all smartphone owners were using an iPhone, but that still leaves the majority running a system incompatible with Apple Pay altogether. Android users can take advantage of Google Wallet, but if banks continue to pick and choose which mobile payment systems they’ll accept, then there will always be a gap somewhere. Are consumers going to change banks if they can’t use their iPhone or Droid in place of a credit card with their current financial institution? Not likely.
This doesn’t mean Apple Pay and Google Wallet are dead in the water, of course. Google Wallet has been around long enough to become fairly trusted, and that trust is growing. The addition of an Apple-friendly equivalent is sure to help speed along universal NFC payment support in large businesses. Surprisingly, however, the most support may actually come from smaller retailers.
Small Businesses Getting In On the Ground Floor
One of the most prominent small business retail solutions online today, Shopify, recently announced that they would be soon be rolling out support for Apple Pay for their iPad-based POS systems. This could change the game for mobile payment options—if the small business world rushes to support NFC payments before the big box conglomerates can catch up, large retailers will have no choice but to accept mobile payments or run the risk of being named “outdated.” While mobile payments don’t look like they’ll become the norm until ten years or so in the future, a sea change like this could cut that timeframe by years, possibly even down to five years or less.
Does this mean small business owners should get ready to toss out their old-school card readers? Absolutely not. The National Federation of Independent Business reports that just under half of all small businesses accept credit card payments at all, and apparently they get along just fine. How is this possible in a world that runs on plastic? It’s a loud testament to the continued use of more deprecated payment methods. The fact that so many small businesses get by without accepting credit means that there are still a great deal of consumers using cash and checks as payment methods. It’s these consumers and entrepreneurs that will slow down the spread of Apple Pay and other mobile payment support options through the nation.
However, small businesses having the opportunity to take part in this financial tech revolution so early in the game is important specifically because so few of them accept the standard credit card payment, not in spite of the fact. This could enable small businesses still living without credit card processing to play leapfrog with payment methods and pass over standard credit processing altogether, resulting in a mass small business update nationwide.
Keep your standard credit card reader close at hand, but if NFC support comes knocking, entrepreneurs should be ready to answer the call. A technological shift like this could not only make shopping at small retailers more user-friendly than ever, it could change the way that banks view both small businesses and new payment processing methods. The fact is, the majority rules, so if you’re ready to help bring small business transactions into the future, be ready to become part of the majority.