Whether small businesses have been operating for a few years or decades, they have likely witnessed payment methods evolve rapidly. From mobile-enabled transactions to microchip-embedded payment cards, small businesses have to adapt to new and innovative payment technology.
With payment methods changing, businesses must prepare to meet the challenge of accepting and processing new kinds of payments not only effectively but securely.
Here are trends in payment methods and technology to watch:
Rise of Mobile Payments
Consumers carry their phones everywhere with them, presenting new opportunities for merchants to jump on the mobile-payments bandwagon. Mobile-based payments are touted as a fast and easy way to process transactions without having customers pull out their wallet. They simply need to have their smartphone on hand and either position their mobile device near the point-of-sale terminal or make payments remotely. By 2019, mobile payments are expected to be valued at $142 billion, according to research firm Forrester. Small businesses that aim to keep up with this payment trend should consider installing equipment for in-person mobile payments to improve the checkout experience.
Online Payment Services the Wave of Future
Another payment type that has surged in popularity over the years is online payment services, according to the U.S. Small Business Administration. The advantage of online payments over traditional methods is that businesses with accounts for online payments are subject to fewer fees than with a typical merchant account. For businesses that process small transactions each day, this makes a huge difference for their bottom line. On the consumer side, it is convenient for them to have the option of making payments electronically while allowing merchants to keep customer payment card information on hand for future transactions.
Increased Focus on Payment Data Security
Small businesses not only need to implement new forms of payment technology, but also ready their point-of-sale systems to process debit and credit cards with comprehensive data security in mind. While data breaches at big firms make headlines, small businesses are not safe from hackers and other threats to information security. Businesses often store sensitive corporate data - from intellectual property and patents to customer information - in their systems, making them targets for cybercriminals. The U.S. Federal Communications Commission urges small businesses to concentrate on improving their payment and credit card security, especially as mobile device payments increase.
Chip and PIN Cards Could Be Standard
While debit and credit cards with magnetic stripes have been the norm in the U.S., they are likely on the way out, and chip and PIN cards will take their place. These cards are named for the small chip embedded in the plastic that produces a small code for each transaction to prevent cybercriminals from simply copying credit card numbers. Small businesses need to be proactive in preparing themselves by purchasing new point-of-sale systems and installing software that will accept this new payment method, USA Today reported. Despite the cost of overhauling their payment systems, small businesses will be glad they did if they avoid the high cost of data breaches, which could reach $188 per stolen record, according to Aeris Secure.