There are about 5 billion cell-phone users around the world. Besides the fact they own a phone, what do all of these people have in common? The odds are pretty good that they’ve purchased something within the last month. This has created a tremendous opportunity for the smartphone electronic payments industry.
Every time a transaction occurs the smartphone electronic payments industry sees potential growth. The popularity of smartphone electronic payments has been growing rapidly because of the benefits they offer both customers and merchants. With new technology continuing to be developed, the growth of smartphone electronic payments is only expected to continue.
Growth of Smartphone Electronic Payments
In 2015, 39% of mobile users made a mobile payment according to the Federal Reserve. Only 25% of cell phone users made a smartphone electronic payment in 2014. Although the statistics have yet to be compiled, it’s expected that approximately 75% of users will have made a mobile payment in 2017. Bluebird has estimated that this will account for $60 billion in mobile payment sales.
Apple Pay, which allows customers to pay retailers from their phones via NFC technology, was introduced in 2014. Android and Samsung quickly followed suit, releasing their own versions of the technology. As the iPhone and the Samsung Galaxy continue to dominate the smartphone market, it’s easy to understand why mobile payment methods continue to grow.
Additionally, mobile payments have likely grown because customers have realized the many benefits smartphone electronic payments offer. They reduce the hassle of having to carry a wallet full of credit cards or cash and having to pull your wallet out every time a purchase needs to be made.
Furthermore, mobile payment methods are secure. NFC technology uses encryption to help keep sensitive information safe during a transaction. Users also don’t have to worry about losing their wallet. When a wallet is lost, owners must call all of their credit card companies to cancel or freeze their cards, and then wait for a new one to be delivered.
Mobile payment users now only have to worry about losing their phones. If they lose their phone, their credit card information will remain secure, and the physical credit cards will still be at home where they left them.
Lastly, a mobile payment app allows for quick payments. NFC technology has been proven to be faster than physical credit card payments. Seeing as our lives have become “go, go, go,” the ability to get in and out of a store cannot be overstated.
Not only do smartphone electronic payments benefit customers, but they also offer great benefits to retailers as well. In addition to Samsung Pay, Android Pay, and Apple Pay, retailers have taken time to develop their own mobile payment apps.
Although these apps can only be used for one specific retailer, customers are using them more and more. Retailer-designed apps reward customer loyalty and make it easier to pay with and reload gift cards.
Research from Parks Associates indicates that over 3 million retailers accept Apple Pay and Samsung Pay, with at least a quarter of smartphone users using these platforms at least once a month in stores. But their research also indicated that retailer-designed payment apps are used even more frequently. For example, Starbucks accepts 5 million transactions a month from their app alone.
Starbucks and Dunkin Donuts are two brands that have created great apps for their users. They offer points to customers for each transaction they make using the app. Over time, these points accumulate until customers are rewarded with a free beverage. Customers also have exclusive access to coupons and specials when using the app.
For example, during football season, Dunkin Donuts offers a free medium coffee to users the day after their local NFL team wins. The catch, of course, is that customers must pay with the Dunkin Donuts app in order for it to be free.
A few years ago, Dunkin Donuts gave away so much free coffee in the New England area that the following year, the perk was changed from free coffee to 87 cent coffees in the area.
Encouraging customers to use their apps help drive brand loyalty. The apps often require a minimum balance, which encourages customers to enter the store again. The apps can also be used to execute successful marketing campaigns by improving ad targeting.
Square Can Accept Payments with a Smartphone
Smartphone electronic payment technologies can be used in multiple ways. In addition to sending payments, technologies have developed that allow people to accept payments with a smartphone. Taking payments with a smartphone can be very beneficial for small business owners who do not own a brick-and-mortar store, or who do not feel it necessary to purchase a fixed credit card reader.
Squareup has revolutionized the way payments can be made to small businesses or businesses who thrive on-the-go. The company was founded by Jack Dorsey, who is also the CEO of Twitter.
What is Square?
If small business owners have ever wondered how to accept payments with a smartphone, Square is likely the answer to their question. Square is a system that processes credit card transactions. Even though it can be used in retail stores, it excels as an on-the-go payment system.
Square can also be beneficial because it eliminates the need for business owners to worry about keeping cash, especially if they are frequently away from the store. Many small businesses are hampered because they are cash-only. Square is the opposite, allowing it to thrive in today’s tech-savvy world.
Square is unique because it offers both hardware and software solutions for mobile payments. Square provides the physical means necessary to accept credit card payments. They also provide point-of-sale software that runs on a smartphone or tablet. The Square app provides full functionality for tipping, reports, and inventory.
Simplifying Credit Card Payments
Square eliminates a big problem typically seen when processing credit card payments. Point-of-sale systems often charge a monthly fee, which can be expensive for small business owners. Even in addition to these fees, business owners owe money to credit card companies for the transactions. It can be very difficult to compile these costs.
Square charges users a flat rate of 2.75% for each transaction, eliminating the need to calculate credit card processing fees. There are no minimum costs associated with these transactions, which makes it a worthwhile option for seasonal businesses or those who otherwise see fluctuating sales.
Square Card Readers
The Square Reader is available for a mere $49. The reader features a long-lasting battery and, once connected, can allow users to accept payments from virtually anywhere. The reader allows customers to dip their credit cards, providing added levels of security now seen with chip cards.
Square Readers also feature NFC technology, which accepts Apple Pay, Android Pay, and other popular NFC payment methods. With integrated NFC technology, Square allows for true mobile-to-mobile smartphone electronic payments.
Square Magstripe Readers come free with the purchase of their service. The miniature readers allow for magstripe and NFC transactions but do not allow for chip transactions. The magstripe reader plugs into the seller’s mobile device, making it easy to accept payments anywhere.
Square card readers are compatible with a number of iOS and Android devices. Square offers a website that allows you to see if your device is compatible.
Square’s point-of-sale system can be seamlessly integrated with their card readers. Their system offers features previously unseen with point-of-sale systems. Business owners can track and manage inventory in real time, and can easily change item details. Employee management is also a breeze using the app.
The point-of-sale system also increases simplicity for customers. Customers complete the transaction on the touchscreen device, providing the amount they would like to tip and their signature. Customers can then choose how they’d like to receive their receipt, selecting from email, text message or print.
The square point-of-sale system is the first of its kind and is designed for today’s world. It should only continue to grow over the coming years.
Square’s Business is Booming
Earlier this year, Square exceeded even their own expectations. The company brought in $462 million during the first quarter of 2017, marking a 22% increase from 2016 Q1 earnings. This is $11 million more than the company was projecting to take in. The company also indicated a 33% increase in gross payment volume from the previous year.
Square’s Q3 report also beat analyst expectations. Their $17.4 billion in gross payments, which demonstrated 31% growth year-over-year, also exceeded Wall Street’s expectations. The company’s Q4 report has yet to be released, but based on the year the company had, it’s reasonable to believe they will close the year on a good note.
A successful year demonstrates the success Square is having, and that users have recognized the company’s technological capabilities.