“Cash, credit, or debit?” Turns out, the question isn’t quite so simple these days: As the payments industry expands and evolves, today’s customers have numerous new technology options for paying for their merchandise, whether online or offline.
Here’s a rundown of some of the most popular new payment options and what merchants should know about integrating them in their stores.
PayPal has long been one of the leading payment processors for online transactions, permitting customers to use either credit cards or bank accounts to pay merchants or fellow individuals online. However, the company is now branching out into in-store services as well: At stores that allow PayPal checkout, customers can pay either with a physical PayPal payment card, or with their mobile phone and a pin number. This allows customers to choose from the payment method of their choice stored on PayPal, whether a credit card or bank account. While a number of big-box retailers have implemented PayPal as a register payment option, small businesses can do so by integrating the PayPal Here software with an iPad-based point of sale system. Currently, PayPal is offering the incentive of refunding all transaction fees until January 2014.
Bitcoin is an open-source network that provides a highly secure way to process payments online, with zero or extremely low transaction fees. At this point, Bitcoin is primarily used for e-commerce payment transactions at a select group of websites; however, in May, Bitcoin announced a partnership with the mobile app Gyft, which would allow shoppers to purchase gift cards for large retailers using bitcoin currency.
The payment system is also being used in an innovative fashion by several brick-and-mortar establishments, such as a New York City bar, EVR, which presents its customers with receipts that have printed barcodes. Customers can scan the barcodes with their smartphones to instantly withdraw funds from their bitcoin accounts. Approximately 10% of customers now use Bitcoin to pay their bills.
The system has benefits for both retailers and customers: For retailers, transaction fees are far lower than credit card processing fees; and for customers, completing the transaction via smartphone makes it much quicker to settle bills. Although the technology is in its infancy, it could be a good bet, especially for a food- or drink-based business where a quicker turnover means more sales.
Google Wallet is a new payment channel offered by Google, in which users can store information from credit cards, debit cards, loyalty cards, and gift cards on their smartphones and online Google Wallet accounts. While any merchant can easily offer a Google Wallet option online, in order to allow Google Wallet for use in stores, the customer must have an NFC-enabled smartphone (some models of Android), and the merchant must have a MasterCard PayPass or other NFC reader. That means it’s primarily in use only in big-box stores; however, Erply, an iPad point of sale system, also offers an NFC reader with its credit card reader.
So what impact will these new payment systems have on your business? The majority of customers are still accustomed to paying with cash, credit, or debit cards, and aren’t likely to immediately insist on these or other payment models. Still, small retailers who offer customers the flexibility to pay in the method of their choice are more equipped to compete with larger companies. It’s worth keeping an eye on trends in payment technologies and adapting accordingly — which you can do far more easily if you have an iPad-based point of sale system, as opposed to a traditional terminal system that does not allow room for innovation.