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Moving to mobile payments

Moving to mobile payments

January 2015

“Mobile payment” has been generating buzz for a while, but there’s a renewed interest in it due to the introduction of Apple Pay and Google’s increasing efforts to drive adoption of its NFC-enabled Google Wallet. According to HP Architect Don Gonzalez, the upswing of mobile payments is the result of several trends: less people using cash, online and in-app purchases, credit card security breaches, and the growth of mobile device. With U.S. mobile payments expected to reach $90 billion by 2017 [1], does your business have a mobile payment plan of adoption yet?

Let’s get started with the basics on the three major players in mobile payment right now.

Apple Pay
What it is: Launched in October 2014, Apple Pay is the shiny new toy of the mobile payment world.
How it works: Apple Pay is aiming to make payment incredibly simple with “tokenization”—meaning, a retailer will never see a customer’s credit card number. It uses biometric security (a.k.a. fingerprint technology) as a standard, and a unique Device Account Number that maps to a portion of the customer’s credit card number. The Device Account Number is stored in a secure element within the iPhone itself [2].
The drawbacks: You need an iPhone 6, 6 Plus, or Apple Watch to use it in stores. It has its online limitations too, requiring you to pay on an iPhone 6 or certain iPads within iOS apps. Also, it’s only supported by about 220,000 U.S. merchants right now [3].

Google Wallet
What it is: Google’s free digital wallet that securely stores your credit cards, debit cards, gift cards, loyalty cards, offers, and more.
How it works: Google Wallet’s been around longer than Apple Pay and is available on both Android and iPhone smartphones. Online, it can be also be used on select Android apps and sites, and with online retailers that feature the “Buy with Google” button at checkout. For hundreds of thousands of brick-and-mortar locations, Google Wallet works wherever retailers post the NFC payment logo—in collaboration with MasterCard PayPass [4].
The drawbacks: Google collects users’ shopping feedback in order to target ads to them, which dips into privacy issues. And it requires network connectivity to use in-store.

What it is: The mobile payment app from the familiar online payment system.
How it works: PayPal’s flagship website is 15 years old and very well established, with 157 active digital wallets. The PayPal app is available for all PayPal customers to use, although like Google Wallet, it requires in-store cellular service.
The drawbacks: As long as your phone is unlocked, a second authorization (like a pin or Apple Pay’s fingerprint) is not needed to pay in-store. It also doesn’t use the in-store point-of-sale methods that Apple Pay and Google Wallet use, and many chain stores and retailers haven’t signed on to use their strictly app-based payment method.

What does all this mean for small businesses? Not much—yet. “In the short term, the move toward mobile payments will be slowed in the U.S. by customer confusion and a proliferation of alternative payment schemes,” says Gonzalez.

That said, small businesses with brick-and-mortar retail arms can implement the fastest plan of adoption. Gonzalez recommends a mobile point-of-sale device such as the HP MX10 Retail Solution that features an EMV/NFC card reader, which can work with Apple Pay and Google Wallet, as well as Visa’s payWave, Softcard, and more. On the back end, businesses with multiple payment terminals can adopt HP’s Atalla Information Protection Software Solutions. It offers rock-solid security that protects 70 percent of U.S. card transactions [5].

The mobile payment landscape is changing rapidly, and there’s no clear right or wrong way to adopt. So if you’re not ready to act just yet, that’s all right—spend the start of 2015 watching, learning, and eventually determining what’s best for your business.

Is your business planning to adopt mobile payments this year? Let us know why or why not in the comments below.

[1] Forrester, US Mobile Payments Forecast 2013-2017: Mobile Payments to Reach $90B by 2017, January 16, 2013
[2] Apple Pay security and privacy overview
[3] NYDailyNews.com, Where can I use Apple Pay? 220,000 U.S. stores accept cardless payment, October 23, 2014
[4] Google Wallet, Frequently Asked Questions
[5] HP Payments & Data Security