Small Businesses at Forefront of Mobile Payments Revolution

Chicago-based Glazed & Infused serves up some of Chi-town’s tastiest, gourmet pastries and doughnuts. Last June, the company began offering patrons the option of paying for their culinary purchases with the LevelUp mobile payment and loyalty card app.

According to Irma Aguilar, who manages Glazed & Infused’s Fulton Market store, only about 20 customers per week currently use the smartphone app, but that number will likely grow as more and more consumers discover the benefits.

Aguilar says, “It’s faster than a credit card transaction and it rewards customers for being repeat guests,” and adds, “Our customers are excited to use it.”

Mobile payment apps have long been popular in parts of Europe and Asia and most analysts agree that the technology is poised to explode in the U.S.  Mobile transaction payments are expected to total $640 million by year’s end, and eMarketer Inc. predicts that number will soar to $62.24 billion by 2016.

LevelUp is but one of many players in the already-competitive mobile payment market. Microsoft and Google have launched their own mobile payment services, as have PayPal and Starbucks, but small businesses appear to be ahead of the curve.

San Francisco-based Square Inc. is one of the better known players in the mobile payments market.  In addition to its plug-in smartphone credit card reader, the company has developed a variety of mobile payment systems for merchants and consumers.

For merchants, the company offers no-cost point of sale hardware, and monthly and per-swipe packages that are as low, or lower than the processing fees charged by most traditional credit card companies. An added benefit for merchants is the access to customer data that mobile payments offer.

Many U.S. consumers, however, appear to be reticent about making the switch from
paying with plastic to paying with their smartphones.  One possible reason could be the relative novelty of the new technology. LevelUp, for example, is currently available in only 37 U.S. cities.  Pleasanton, California-based Javelin Strategy & Research mobile research director Mary Monahan says, “It’s on the provider to get enough merchants on board so consumers want to use it.”

Still, Monahan sees a bright future for the mobile payments industry, especially for more highly customized services like Groupon’s Breadcrumb app, which targets restaurants. In addition to handling mobile transactions, the Breadcrumb app, which is available to iPad users, also offers back-end support.

For merchants considering mobile payments, Monahan suggests determining their precise needs, and going with a local provider that offers good customer support. “Good service,” she says, “is going to be key.”

Reference:

Monica Ginsburg.  “Mobile payments: customers paying up via smartphone.” ChicagoBusiness.com  12/10/2012

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