Small business owners have enough to deal with in their retail sales operations than to be an expert in the payments industry as well. But if you have been reading the latest marketing hype, you would have been led to believe that a “Brave New World” is coming. If you are not on board with the latest point-of-sale devices, then your customers will leave in droves to frequent your competitor that does have them. Fear has a way of getting our attention, but what is the real story?

What is driving this new revolution in the merchant processing industry? 

Back in the nineties, Bill Gates of Microsoft used to delight in presenting his view of the future at the annual consumer electronics convention in Las Vegas. With elaborate videos of how electronics and the internet would change every aspect of our lives, he would articulate his vision of things to come. Most of his predictions have come true, but the overarching theme was one of connectivity and marketing directly one-on-one with individual consumers.

His vision would require the ability to conduct complex interactions down to the furthest network endpoint. Fast forward to the present, and his vision has arrived. The advent of the smartphone provides the last piece in this puzzle. These phones are equipped with a complex operating system- capable of accessing the internet and running sophisticated software interactive applications in the palm of your hand.

How would this vision play out in real life? 

Imagine that you are in a retail store shopping for a desired item. You see something you like and scan the barcode with your smartphone. Unbeknownst to you, the electronic “wallet” in your phone has been keeping track of your previous purchases. In a instant, you will receive a message that may direct you to another store with a better deal or receive a promotional discount from the store you are in, as well as a suggestion for another item at a preferred price, all based on your previous spending behavior. Most industry pundits project 3 to 5 years as the timeline, but these guesses may be a bit optimistic.

Are any of these new services fully tested now and in operation? 

The answer is “Yes,” as far as remote processing on the merchant front is concerned. You may have already seen ads on television networks touting “wireless” processing. A simple card-reading device can be plugged into the earphone socket of your phone to enable merchant commerce anywhere and at any time of day “24X7.” This process replaces the clunky, cumbersome equipment solutions of the past decade. It has been tested and accepted by major card associations as safe and secure.

You also get the lowest industry swipe rates since the card is present, and you eliminate having to worry about mounting accounts receivables. Instant working capital is a wonderful benefit when dealing on-the-go with strangers. Square and Intuit are the most recognized brands, but you may have to educate your customers regarding security concerns with mobile phones. Software apps will encrypt everything, and your merchant processor will warehouse all personal identity and card information to prevent fraud from potential hackers. Cardholders, however, may still be suspicious, and you may need to be prepared with an adequate explanation of safety precautions in place.

What about the cardholder-based experiments? How are they going? 

Most all of these are in the early prototype stage of development and testing. With one system, you merely wave at or tap the terminal with your phone, and all of the payment information is exchanged “in the cloud” so to speak. In another, your phone scans a two-dimensional type of barcode that enables the terminal to communicate wirelessly with you phone, thereby achieving the same purpose and completing the transaction.

Issues of fraud and what happens when you lose your phone will temper consumer adoption of any new payment technology, similar to our experiences with the internet. There are consumer surveys that suggest that consumers are ready for change, but experience tells us that human behavior takes time to adapt, especially when money is involved.

What is the best advice for merchants at this stage? 

To begin with, read up on the topic to familiarize yourself with the terminology and the potential impacts on your business model. Websites like are good for this purpose. Next, ensure that your merchant processor is up-to-date on the latest directions of the market and is capable of supporting your future needs when you decide to act.

Lastly, experiment with “wireless” processing. It works and has been thoroughly tested. Let your imagination run wild with how many possibilities for growing your business this new technology could enable.

Avoid wasteful experimentation, but be prepared! Good luck!

Have you used a mobile payment system? Are you considering using one? We would love to hear about your experiences. *

*Disclosure: the company providing this content has a client relationship with or its affiliated entities.