With more and more people transitioning to cashless payments, it’s a no-brainer that businesses opt to take payments on the phone from their customers. A survey by BDAILY Premium found that only 17% of UK consumers prefer paying in cash in 2023.
But how to take payments on your phone as a business and what are the benefits of doing that? Let’s take a look.
Benefits of taking card payments on your phone
1. Better cash flow
Where traditional paper cheques take days to process and clear, phone payments can be made almost instantly (or at most within a single business day). This results in improving the cash flow of a business.
2. Convenience for the customers
Offering phone payments provides a convenient option for customers who prefer to make transactions over the phone rather than in person or online. This flexibility can lead to increased sales and enhanced customer experience.
For example, a busy professional will find it easier to make a quick purchase over the phone during her lunch break rather than visit a physical store.
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3. Reduced card abandonment
Phone payments can reduce card abandonment rates for e-commerce SME platforms. This is because it can address common barriers to online purchasing like security concerns and difficulty in navigating the checkout process.
4. Reduced hardware charges
Phone payments significantly reduce the cost of expensive hardware such as EPOS terminals or card readers. Instead of investing in hardware solutions, your business can leverage existing technology such as Near Field Communication (NFC) to process payments securely over the phone.
This cost-effectiveness approach allows businesses to minimise upfront expenses and operational overhead while still offering convenient payment solutions to their costumes.
5. Enhanced security
When you take payments on the phone, you need to verify the customer’s identity and credentials first. This makes it more secure than traditional in-person transactions. With phone payment solutions, businesses like yours can mitigate the risk of fraudulent activities like stolen credit card information and unauthorised purchases.
6. Competitive advantage
Offering phone payments can provide you with a competitive edge in the market. You can differentiate yourself from the competitors by meeting customers’ evolving expectations. In today’s digital age, consumers increasingly expect businesses to offer multiple payment options to accommodate their preferences.
By embracing this trend, you can attract and retain more customers which can potentially outpace your competitors who provide limited payment methods. For example, a pet grooming salon can stand out from competitors by offering phone payments catering to busy pet owners who value speed and convenience when scheduling appointments and making payments.
7. Location independence
Phone payments offer you the flexibility to accept payments from anywhere, regardless of the physical location. Whether working from a storefront, home office or on-the-go, businesses can seamlessly process transactions over the phone. This enables the SMEs to reach customers beyond their local market and expand their business.
Process of accepting card payments on the phone
In order to accept card payments on the phone, you need to follow these general steps.
1. Setting up an account
First, you need to set up a merchant account. This enables businesses to accept payments from both credit and debit cards. If you choose to employ third-party payment processors, you may not need to have a merchant account.
2. Choose the transaction method
Decide which type of payments you will accept from your customers. While a mobile card reader will need certain hardware (like a card reader), you can choose to have a virtual terminal (on your computer), payment link feature, app payment feature or QR code option.
3. Install the needed software
The phone payment method that you choose will generally come with an application that is compatible with Android or iOS. You need to install it to begin accepting phone payments. Normally, most applications come with in-built dashboards that depict all the functions, like transaction reporting, virtual terminal and data analytics.
4. Take details and process the payment
When a customer intends to make a payment, you may need to enter their credit card information like expiration date, card number and CVV code (or they can simply tap or swipe their card). Once you enter it and initiate the payment, your payment processor will then take over the responsibility.
It will verify the details, process the payment and update you when the transaction is approved. You can then send the receipt to the customers (in hard form or via email).
Ways of accepting card payments on the phone
Mobile card readers
Choose a suitable card reader, sign up with a payment processor and attach it to your phone through Wi-fi or Bluetooth. Download the mobile app and use it to take payments from customers. They can either pay through card swipes, chip payments or contactless payments. This method requires the use of a card reader in addition to the phone.
Method: Remote
Mobile website or app
Customers can make card payments on your mobile-optimised website and app as well. To enable this, you have to integrate a payment gateway into your website. Ensure SSL encryption to secure transactions and protect customer data.
To make the payment, the customer will choose their desired product and add it to the cart before proceeding to checkout. There, they will enter their card details and make the purchase.
Method: Remote
Payment links
To employ this method, you need to utilise a payment gateway or online invoicing platform that offers this functionality. The business page generates a unique payment link for each transaction. You can share that link with your customers via email, text message or WhatsApp along with the instructions.
The customers can then simply click on the link, enter their details and make the payment.
Method: Remote
Mobile wallets
In this method, you will have to integrate mobile wallet platforms like Apple Pay, Google Pay and Samsung Pay into your payment processing system. The customers can then pay through their NHS-enabled phones. They will simply click the ‘Tap to Pay’ option(in the case of iPhones), hold the phone over their device and the system will automatically process the payment.
Method: In person
QR code payments
To accept mobile card payments through QR, you need to integrate a QR code payment solution with your payment processing system. Each transaction generates a unique QR code that customers can scan on their phone using either their phone’s camera or a QR code scanning app.
Once scanned, they are notified about the payment made and you can give them the receipt.
Method: In person
Cost of accepting card payments on your phone
- Setup fees: Although many payment providers don’t charge a setup fee, some companies charge an installation fee for their service.
- Transaction fees: This is a necessary fee that is charged on every transaction. It’s a percentage of the transaction amount plus a flat rate. If you make a card-not-present transaction, the rate is usually higher than a normal transaction.
- Monthly service fee: Some payment providers charge a monthly fee for their service because it includes advanced features like analytics and customer loyalty programs.
- Hardware cost: This includes the cost of a mobile card reader if you plan to take payments through it.
- Chargeback fees: This is the fee that falls upon the business in case a customer disputes a successful charge.
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FAQs
You have to bring the back of your phone close to your customer’s NFC-enabled phone (or device). After your customer presses the ‘Tap to Pay’ option on the screen, the payment process is initiated and you’ll hear a beep when the transaction is successful.
Yes, you need to verify the customer’s identity and credentials before accepting payments on the phone. Moreover, there are encryption and tokenisation protocols installed in the apps. All of these make the payments secure.
