All About Mobile Payment Processing

Florence Carpenter

With a reliable credit card processing system, your business will be able to accept mobile, credit, and debit card payments from anywhere in the world. It's a useful investment that can definitely help your business flourish. Can't process card payments yet? Don't worry, we're here to guide you through every step of the way. Keep reading for the best mobile payment processing blog you'll see online!

What Are Mobile Payment Processing Applications?

Mobile payment processing applications are essentially programs that allow users to transfer funds from point A to point B with the use of a mobile device. The nature of mobile transactions varies vastly.

For example, you can use mobile payment apps to purchase a product or service—so long as the merchant has the required processing system. At the same time, you can also use these apps to transfer funds in real time to different accounts. 

Overall, it really depends on what your goal is. These mobile payment applications have been gaining popularity in recent years with the rise of digital natives.

History of Mobile Payment Apps

Despite their recent success, mobile payment apps weren't always seen in a good light. Consumers shunned the idea of mobile transactions when they were first introduced. Understanding the complexities, working through the existing issues, and trusting an entirely new concept was too big of a risk for many merchants and consumers.

Mobile Payment Processing

Mobile payments were first made available to the public by Coca-Cola in 1997. The world-renowned soda brand released a handful of vending machines in Helsinki Finland that allowed customers to purchase their products using SMS messaging. Bear in mind that SMS messaging was also a new concept at the time.

This small, yet bold move by Coca-Cola served as a catalyst for the boom of mobile payment transactions. Later on in the same year, Finland's Merita Bank developed the first ever phone-based banking service application that allowed users to transfer more than just a few pennies and dollars. Up until then, mobile payments were limited to very small microtransactions.

How Are Mobile Payments Processed?

In-Store Transactions

For in-store mobile payments, the customer will have to hold their phone close to an NFC-enabled mobile card reader. The card reader then encrypts the data information and passes it to your chosen payment processor. 

Once the payment is authorized, the funds are deducted from the customer's e-wallet, they will reflect on your chosen merchant account, and the transaction will be marked over.

Online Transactions

For online transactions, the customer will have to input the necessary details in your payment gateway or virtual terminal. These pages will be provided by your chosen card processing brand. The transaction will be marked over once the payment is authorized and the funds reflect in your merchant account.

Mobile Credit Card Payment Processing for Small Businesses

Mobile Payment Processing

One of the most common misconceptions about credit, debit, and mobile card processing is that it is limited to large businesses that generate high-volume sales on a daily basis. It's not. Being able to accept card payments is an option open to all types of business—whether you're a small online startup or a large retail store.

If managed properly, investing in a credit card processing system may help businesses reach a wider market, boost daily sales, and improve the overall customer shopping experience. Of course, not all processing systems can be relied on. You need an application that is:

  • Secure: This is perhaps the most efficient factor to consider. Make sure you choose a secure, reputable credit/mobile card processing brand that prioritizes the safety and security of their merchant and cardholder clients.
  • Cost-Efficient: Note that processing credit and debit card payments isn't free. If you're not careful, the charges and rates can eat up your profits. Look for a cost-efficient option that fits your budget.
  • Flexible: There's no one-size-fits all solution to credit card processing. That's why entrepreneurs need to find a flexible system they can customize to match their specific business needs and requirements.

Top 10 Best Mobile Credit Card Processing Apps for Small Businesses

#1: Square

With its reasonable processing fees, easy-to-use mobile card reader, personable customer support team, versatile app (available on both Apple and Android devices), one-day fund remittance process, and comprehensive features, Square definitely deserves the number one spot in our list of best credit card processing service providers.

Square is an all-inclusive mobile card reader that caters to an array of businesses. Whether you have low- or high-volume orders and run an online or physical store, they have a corresponding plan for you.

Plus, Square prioritizes security more than any other merchant account provider does. They go the extra mile to reduce the possibility of a data breach by deleting sensitive card information per transaction payment processed.

Fees

Sqaure does not charge recurring monthly fees and their mobile card reader comes for free when you sign up. Clients can upgrade to a tap and chip reader for just $49.

For processing fees, Square has a standard 2.6% rate plus $0.10 fee for swiped payments, 3.5% rate plus $0.15 fee for manually keyed-in payments, and 2.9% rate plus $0.30 fee for invoice payments.

#2: PayPal Here

PayPal comes in at a strong second for having a multi-feature, all-inclusive credit card processing system perfect for all Android and Apple devices.

Not only does PayPal allow businesses to process card, debit, and mobile transactions, but the system also helps you record inventory, track employees, send/request invoices, and of course, transfer funds to different accounts. PayPal arguably trumps Square when it comes to all-around merchant services.

Plus, PayPal has a very responsive—at times strict—customer support team available to assist you 24/7. They go the extra mile when it comes to security. In fact, PayPal will hold all funds that are suspected to be involved in illegal or fraudulent transactions.

Fees

PayPal offers competitive flat-rate pricing rates. Swiped payments have 2.7% rate charge while manually keyed-in payments have a 3.5% rate plus $0.15 fee. Their chip and contactless card reader are a bit pricey at $59.99. However, clients can be at ease knowing PayPal hardware devices can be relied on for daily high-volume transactions.

#3: PayAnywhere

PayAnywhere is a reliable mobile credit card processing system known for its overall cost-efficiency. In fact, high-volume businesses that generate more than $5,000 in sales per month won't have to pay any monthly minimum volume fee or charge. It offers features similar to PayPal, but they don't charge nearly as much.

Perhaps what sets PayAnywhere apart from any other mobile card reader on the market is its pre-authorization feature. It's a function that allows merchants to temporarily "hold" a specific amount on their customer's card.

The amount put on hold won't be charged to the cardholder, but the amount put on hold cannot be spent anywhere else either. This is ideal for businesses that offer appointment-based services such as spas, resorts, travel agencies, and hotels.

Fees

To use their physical card reader and point of sale (POS) system, you'll only need to shell out a meager $12.95 monthly fee. Swiped payments have a fee ranging from 1.69% to 2.69% and manually keyed-in payments are at a 3.69% rate plus $0.19 fee.

Their mobile credit card processing system is free to use, but transaction charges are a bit higher at 2.69% for swiped payments and 3.49% plus $0.19 for keyed-in payments.

#4: Shopify

Shopify is, without a doubt, the best credit card processing for budding online sellers and e-commerce entrepreneurs. It offers an all-inclusive package featuring your own online inventory tracker, virtual terminal, online shop/website, card reader, and payment gateway. It basically has everything you need to start selling online using just your iPhone or Android device.

Pro Tip: If you have an existing online shop and want to expand by building a brick-and-mortar business, Shopify also offers physical point of sale (POS) systems to accompany their mobile credit card readers.

Fees

Swiped payments have a 2.75% charge per transaction while manually keyed-in payments have a higher 3.5% rate plus $0.15 fee.

Online stores, however, follow different rates. The Shopify Basic plan has 2.9% rate plus $0.30 fee per transaction and $29 monthly fee. Main Shopify plans have a 2.6% rate plus $0.30 fee per transaction and $79 fee. And an Advanced Shopify account has a $299 fee and charges a 2.4% rate plus $0.30 fee per transaction.

#5: EMSplus

For businesses looking to start accepting credit, debit, and mobile payments while following a tight budget plan, try EMSplus. It is one of the most competitive, lowest-costing mobile card readers on the market.

Apart from being affordable, their system is also very comprehensive. With just an Apple or Android device, businesses will be able to create e-mail receipts, track inventory, accept tips (on top of payments), and categorize products sold online. And if you encounter any issue, they have a customer support team on standby 24/7.

Fees

Merchants who sign up for EMSplus won't have to pay for any monthly or annual fee. Their mobile credit card processing system is free to use and is compatible with both Apple and Android devices.

They charge a 2.25% rate for swiped payments and a 3.5% rate plus $0.15 fee for manually keyed-in payments. The card reader is free upon signing up.

#6: GoPayment (QuickBooks)

If you're looking for all-in-one mobile credit card readers that process payments via EMV cards, Apple Pay, Samsung Pay, PayPal, and Google Pay, try GoPayment. It's an affordable mobile credit card processing system that features an easy-to-use program, affordable Point of Sale (POS) hardware, and predictable flat-rate pricing system.

What sets GoPayment mobile card reader systems apart is that you can connect it to QuickBooks, making bookkeeping significantly easier. When accounting or taxing day comes, all you'll have to do is open your GoPayment account and you'll instantly be able to access all the transaction records needed.

Perhaps the only downside to GoPayment is that they charge an additional fee of of $0.25 per transaction. This makes it harder for small businesses to process small transactions. For larger companies that process high-ticket transactions, however, the $0.25 extra fee shouldn't dent your profits.

Fees

GoPayment charges a 2.4% rate plus $0.25 fee for swiped transactions and 3.4% rate plus $0.25 fee on keyed-in payments. This may seem a little steep, especially for small businesses, but the good news is they don't charge setup, application, or even early termination fees. Plus, their hardware devices are one of the most affordable on the market.

#7: Innerfence

Innerfence is perhaps the best credit card processing app for businesses that need comprehensive mobile credit card readers. The system offers detailed records of your refunds, transaction history, signatures, maps, and even sales tax computations.

Also, Innerfence has a secure date encryption feature. The risk of data breaching decreases significantly as the software erases all sensitive card details and information involved once the payment is authorized.

Fees

To use Innerfence, new merchants will have to shell out a $49 monthly fee ($39 per month if you choose annual billing) and a one-time payment of $79 for the mobile credit card reader. Swiped and keyed-in payments have the same 2.9% rate + $0.30 fee per transaction.

If you're an existing user, you'll have more options: Individual, Professional, and Business. Merchants who opt for the Individual plan will have to pay $9 per month and shoulder a reduced transaction rate of 1.9%.

Those who apply for a Professional plan will have to pay a higher fee of $79 per month but the transaction fees drop to 0.9% per transaction and businesses can use up to 10 terminals.

Lastly, merchants that apply for a Business plan are charged $299 per month, but can use up to 20 terminal fees at 0% transaction fees. This is ideal for businesses that heavily rely on their mobile credit card readers for day-to-day purchases, sales, and transactions.

#8: PaymentCloud

PaymentCloud is a mobile credit card processing service provider based in California. They offer the standard point of sale (POS) systems, virtual terminal and payment gateway pages, merchant cash advance options, and EMV payment terminals.

When it comes to customer support, PaymentCloud follows a very hands-on approach. In fact, all new clients get a dedicated account representative to handle them and their accounts. You can count on your account rep for whatever concern you might have.

What sets PaymentCloud apart from any other mobile card reader service provider is they cater to all kinds of businesses from a wide array of industries—including high-risk ones. In fact, they even work with CBD and kratom brands. This is definitely one of the best options on credit card processing for small business ventures that are deemed high-risk.

Fees

Merchants will have to shoulder a 3 to 6.5% processing rate per transaction. PaymentCloud charges the same rates for keyed-in and card swipe transactions. For online sellers, you'll follow a flat-rate pricing system of $25 for payment gateways and a 2.90% rate plus $0.30 fee for virtual terminals.

#9: Flagship Merchant Services

Flagship Merchant Services is a very popular mobile credit card processing brand many businesses use. It was first introduced in 2001, and today they are recognized as one of the most reputable pioneers that has earned various credit card processors/credit card processing awards over the decades.

What makes them a solid option on credit card processing for small business ventures is applicants can negotiate the fees and rates with their respective agents. Processing rates, transaction fees, and other charges vary on a case-by-case basis.

Fees

Flagship Merchant Services charges a monthly fee of $29.99, but users can cancel any time at no extra cost. There's also an annual PCI compliance fee of $99.

They have a standard processing rate of 1% to 4.99% for keyed-in and swiped transactions. Online sellers who opt for a virtual terminal fee will have to shoulder the same rates per transaction as well. To learn more about the setup fees of online payment terminals, you'll have to consult with one of their agents.

#10: Merchant One

Merchant One is a payment processing option first introduced in 2002. It's recognized as one of the pioneers in card reader services and is trusted by more than 100,000 merchants all across the country. Their mobile credit card reader is available on iPhone and Android devices.

Is this a good credit card processors/credit card processing system? According to Merchant One reviews, it's one of the top Fiserv merchant service resellers, so while it may have its downsides, it's still a decent, reliable system that offers competitive, affordable rates and fees.

Fees

Merchant One reviews reveal that the brand offers one of the best, competitively priced mobile credit card reader rates per transaction on the market. Swiped payments have a meager 0.29% to 1.55% rate while keyed in payments have a rate of 0.29% to 1.99%. Clients also get to enjoy the lowest monthly fees at just $6.95 and a zero annual PCI compliance fee.

Choose the Right Credit Card Processing Service for Your Business

Whether you're a seasoned entrepreneur or a budding small business owner, it's essential to choose a credit card processing system that addresses your specific needs and demands. There's no one-size-fits-all plan when it comes to processing payments.

Carefully assess the current state of your business, gauge whether choosing to accept credit card payments would boost business performance, calculate how much you can allot for payment processor fees per month, go through the credit card processing solutions mentioned above, then see which matches your business model. Some factors to consider include:

Fees

Many small business owners shy from getting a credit card reader because they don't want to pay the transaction fees involved. However, these fees aren't as dangerous as they seem. The key here is to understand and carefully calculate how your profits per month would be affected if you chose to accept payments via credit card.

If you don't want to waste money on unnecessary fees, we suggest going with a payment processing option that offers affordable plans, low interchange rates, and if possible, no monthly fee.

Business Type

You need a credit card processor that suits your business model. Reassess what services/products your business offers, record how payments are commonly processed, and see what payment solutions best suit you. Investing in a credit card processing unit your customers won't use is the worst you can do in this situation.

For example, there's no sense in paying extra for a payment gateway or virtual terminal if you don't take orders online. Alternatively, e-commerce business owners may not need a physical Point of Sale (POS) system if they don't have a brick-and-mortar store. Their best mobile device should be enough.

Customers Preferences

Your goal should be to expand payment options and accept payments made through servers your customers prefer. If your customers prefer debit and credit cards, go with that. On the other hand, if the majority of your customers would rather use a mobile payment app or digital wallet, consider upgrading your credit card processor to one that accepts mobile payments as well.

Pricing and Profit

Before you formally decide to accept credit cards, do some recalculations to gauge whether doing so would be a smart move for your business. This especially applies to budding small businesses tight on funds.

After talking to multiple credit card processing companies, you should get an idea of how much the fees will set you back. Now, if you'll barely be making a profit, there are two things you can try: look for cheaper credit card reader systems or implement a small price increase. See which best aligns with your business.

Benefits of Mobile Credit Card Processing Services

Cash payments are great, but if your business still doesn't accept credit cards, you'll get left behind. In fact, a recent survey reveals that there are more than 191 million adult Americans who use credit and debit cards for their daily transactions.

Investing in a credit card processing system also allows businesses to better serve their customers through the ease and convenience of credit card/mobile payments. You'll have to pay processing rates per month, but these fees won't matter if you can utilize the card reader to its full potential and exponentially increase your customer base.

Apart from expanding payment solutions offered, here are the benefits of getting a credit card payment processor for your business:

1. Simple and Secure Customer Transactions

Some of the reasons why many modern consumers chose to pay with their credit and debit cards include:

  • Security: Credit card transactions are generally secure. Most modern payment processor systems make use of the latest, state-of-the-art card reader software programs that prevent data breaches of all levels.
  • Convenience: Carrying a bulky wallet around isn't practical. It attracts too much attention, puts the customer at risk of pickpocket thieves, and honestly looks awful.
  • Purchasing Capacity: Customers with good credit scores and high credit limits can purchase almost anything they want without taking a single dollar note of out their wallets.

2. Convenient Processing for All Major Credit and Debit Cards

Credit card processors allow your business to accept payments made through all kinds of credit card brands such as Visa, American Express, and Mastercard, among others. Just be careful with the processing rates. Note that some card brands charge higher transaction fees when authorizing and processing card transactions.

Pro Tip: Expand the payment solutions your business offers even further by opting for the best mobile credit card readers. Unlike the traditional card reader, these also authorize mobile payments and credit/debit card payments made through online servers such as a payment gateway, virtual terminal, or mobile app.

3. Unrestricted Transactions by Accepting Credit Card Payments Remotely

Using credit card processing systems that allow you to accept credit card payments made internationally is essential if you want to cater to customers from other countries. This is one of the best merchant services for e-commerce entrepreneurs with worldwide sales or business owners that primarily serve traveling tourists.

The idea here is to work with credit card processing companies that provide clients with their own payment gateway—a virtual terminal that authorizes credit card payment requests. Once you have that, you should be ready to accept payments made outside the country.

Note: Your payment processor may charge a cross border fee to process international credit card transactions. Make sure you keep this in mind when recalculating profits and fees per month.

4. Faster, More Efficient Accounting and Inventory Process

When it comes to cash transactions, business owners are responsible for performing the accounting, auditing, and inventory duties themselves. Some choose to hire a team to handle these tasks.

However, if you worked with a merchant account provider, all these can be done for you. Merchant accounts serve as the middle ground between your credit card processing system and bank account. After authorizing a payment to your merchant account, the system automatically deducts processing fees and updates your online inventory—if available.

5. Secure Payment Transactions and Less Risk in Cash Handling

Cash handling is very risky. Unlike card and mobile payment transactions, crooks and thieves can steal cold hard cash from you with brute force. If that happens, the chances of you getting your money back are low. In fact, even if the authorities catch the thieves, the business owner won't be able to retrieve the money if it has already been spent. Of course, the crooks will still serve their sentence.

This risk is the reason why financial institutions, banks, and big businesses that transact large amounts of cash regularly hire multiple security personnel and cash handling officers to transport their funds in a secure armored vehicle. If this isn't something you'd be willing to take on, we suggest transitioning to the best mobile and card payment options.

Of course, credit card transactions aren't without risk. The funds in your merchant account can't be stolen per se, but hackers can tap into the system and steal sensitive credit card details. If this happens, however, a quick call to the customer support team should be enough to resolve the issue quickly. Just close the accounts compromised and the hackers won't be able to do anything.

Frequently Asked Questions

What are mobile payments?

A mobile payment is generally the transfer of funds from one account to another using a mobile device—iPhone and Android phones, primarily. This is an alternative to over-the-counter bank deposits, cash payments, and transactions via debit/credit cards. Most transfers are credited in real-time. There's no need to wait several business days for fund clearing.

What is a mobile wallet?

A mobile wallet is basically the digital version of your physical wallet. Think of it as a virtual space in your Android device or iPhone where you can store cash and credit cards. You can also connect your account to a debit card so it's easier to request money or transfer credits to your mobile wallet.

How do mobile payments work?

First, you'll need a destination. Funds stored in a mobile wallet can be used to pay for goods/services or transferred to different bank/mobile accounts. The transaction will only push through, however, if you have the QR code, virtual terminal route, or account number of the user you wish to transfer funds to.

Next, select the source of the funds. Will the funds be coming from your debit card accounts, mobile wallets, or credit cards? Remember: your wallet has to be funded. Lastly, transfer the funds. Most mobile payment apps can clear fund transfers in just a matter of seconds. Of course, you can always check on your iPhone or Android device if the payments pushed through.

What are the benefits of mobile payments?

If your business doesn't accept mobile payment options yet, now's a good time to start. Some of the benefits include:

Low Fees

Mobile payment transactions often have very low processing rates. In some cases, you won't even have to pay anything if the person you're sending funds to is using the same mobile app as you are (e.g PayPal to PayPal transfers). On the other hand, credit card processing fees can spike up to 4% of the transaction amount being processed.

Free Membership

Most mobile app accounts and mobile card options are free to use and have no monthly fee. If they do have startup fees, it's usually very minimal.

Note that not all features of your mobile payment processing app are free to use. You may have to pay a monthly fee if you want to create, for example, a business account version of your mobile payment processing app. The good news, however, is that the monthly fee these apps charge is almost always significantly lower than what merchant accounts cost.

Real-Time Transfers

One reason why some businesses dislike credit card processing systems is that the funds take too long to be credited into their merchant accounts. If you're running a time-sensitive business, you might lose profit.

A good solution here is to use mobile card and mobile app payments in the meantime. Most options offer real-time transfers—even if the funds are being transferred to a third-party bank account or mobile payment app.

Once you have enough funds to cover the business days it takes to process card transactions, you can upgrade to a system that accepts credit and debit cards.

International Payments Accepted

There are plenty of merchant account providers that accept credit card payments made from outside the country. The only problem here is these usually come with a high cross border processing rate.

If this isn't something you're ready to shoulder, opt for mobile card and app payments. Most of these options charge significantly lower processing rates, especially if you're using the same mobile card brand to transfer and receive funds.

Efficient Online Store Tool

Mobile apps are essential e-commerce solutions for any online entrepreneur. Apart from the lower rates, these offer the best merchant services for e-commerce stores such as payment gateway pages, online inventory trackers, and even site builders.

Plus, these apps allow you to run your store using just your iPhone or Android device. So even if you're on vacation or out of the country, you'll be able to track store sales and process payments as long as you have your phone and access to the internet.

What is the future of mobile payments?

Businesses around the country might be noticing an influx of customers choosing to pay via mobile apps and cards rather than credit cards. This is due to the fact that mobile payments are slowly becoming the new norm. In fact, experts predict the mobile payment market to continue rising at a rate of 33% until 2026!

Some factors that might contribute to its popularity include:

Increased Population of Digital Natives

The rise of the digital native generation is paving the way for technological advancements in the financial sector. Once the kids and teens of today reach adulthood and start subscribing to banking services, the need for alternative mobile payment apps will increase as well.

Improvement of Mobile Applications and Systems

Technology is continuously reshaping society, this includes the way businesses and customers process payments. Even the best mobile apps continue to improve every day.

The programs that were once shunned for being at risk of data breaches are now hailed as one of the most secure, safest mediums used to transfer funds all across the globe. It's no exaggeration to say that more users will turn to alternative payment applications such as mobile processors in the future if the fast-paced developments continue.

The Rise of Neobanks

One might notice the sudden rise of neobanks in the country. These are financial applications that allow both businesses and customers to perform an array of banking tasks and services using their mobile phones—Android and iPhone devices. Unlike traditional banks, they do not necessarily have physical branches.

How can I accept mobile payments at my store?

Modern payment processors allow even small businesses to accept payments made through a mobile app or mobile card. It can be used by anyone, whether you're running an online or brick-and-mortar shop.

To get started, the first thing you need is a reliable credit card processing system. Ask your agent about upgrading the plan so you can offer a mobile app payment option to your customers as well. Make sure you're prepared for the extra processing fees. For businesses that don't accept card payment options yet, they'll have to apply for credit card processors first.

On the other hand, if you don't plan on accepting credit and debit cards but want to process mobile app payments online, opt for mobile credit card readers. These are payment processors that provide businesses access to a virtual terminal that can authorize and process mobile card payment transactions. Some of the best options in the market include PayPal, Square, and Shopify, among others.

What is a mobile money transfer?

A mobile money transfer is defined as the process of sending money from a mobile app or mobile card (usually installed on an Apple or Android device) to any other mobile app, mobile card, or even bank account. In most cases, the transactions are fast, reliable, and real-time.

Why use mobile payments?

Mobile payment apps are a great finance tool for both business owners and customers. These allow you to transfer funds to any bank or mobile account in the world using just your iPhone or Android phone. Also, most transfers are in real-time. This trumps credit and debit card transactions that take multiple business days for the funds to reach one's merchant account.

Additional Resources

Artificial Intelligence (AI) and fraud detection

Advancements in the AI industry allow credit card processing brands to further boost their security and reduce the risk of data breaches and fraudulent chargebacks.

The role of Artificial Intelligence (AI) in financial services

Mobile payment applications have changed drastically over the past decades. What was once a simple system used for microtransactions in vending machines has evolved into a multi-trillion-dollar industry recognized all across the globe. See how AI helped shape the development of these financial applications.

Would you consider integrating credit/debit card and mobile payment processing solutions into your business? Tell us why or why not in the comments section below!

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