Mobile Electronic Payments & Using Your Smartphone To Process Payments

Credit and debit cards make payment easy. You don’t have to count out bills or coins, and you don’t have to spend the time writing out a lengthy check. With just the quick swipe of a piece of plastic, your transaction is completed and you’re on your way in a matter of minutes. It’s so easy, it’s no wonder cards have become one of the most popular forms of payment in our country today.

Until recently, cards could only be accepted at a credit card processing terminal, usually stuck in front of a cash register or on the counter at any store or restaurant you go to. Now, thanks to the advent of smartphones (and some pretty amazing apps) you can accept plastic using only your phone. With a small device you can turn your smartphone into a card-processing machine on which you can swipe a card, type in an amount and have the funds transferred into your bank account within just a few days, or sometimes minutes.

The two biggest providers of smartphone card processing are GoPayment and Square. Both are free services to set up, and you can simply apply via their respective websites. With GoPayment, you will be required to pass a credit check before you can be approved for an account. Once you’ve signed up for your account, GoPayment or Square will mail you the card-swiping device for your phone. Also called a dongle, this device plugs into the headphone jack of your iPhone or Android-based phone and has a slot in which you will swipe cards when accepting card payments.

You will also need to download your device’s corresponding application for your phone. This application is where you will type in the amount for each transaction you swipe; it will also be where you key in card numbers if a card isn’t present at the time of a transaction (as in an over-the-phone order). Once a card is swiped on your device, the application will send the transaction information wirelessly for processing. On smartphone payment devices, transactions are usually processed and deposited into your bank account within 24 to 48 hours.

Although phone payment capabilities do make payments easier for on-the-go businesses and peer-to-peer transactions, one of the biggest benefits is the cost savings it comes with. Typical credit card processing contracts come with a high monthly fee and, often, a time commitment. Unless you’re bringing in a high volume of card transactions every month, this way of processing is just not cost-effective. Smartphone card processors charge much lower fees and don’t require a time commitment or contract. For example, Square has a simple and low-priced system: all swiped card transactions are charged 2.75 percent of the total. Keyed-in card transactions are charged 3.5 percent, plus a $0.15 fee. There is no total monthly fee, and no contract for you to sign.

What makes these devices and applications truly unique, is that individuals can set them up as well. If you are out to dinner with a group of friends and the restaurant won’t split the bill, you can just swipe your friends’ cards and have the money deposited into your bank account, minus a small fee.

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