The following is a guest contributed article to MMW from Greg Goldfarb, CEO of Flint, a mobile payments solutions company.
These days there are a number of mobile payment applications and accessories for smartphones and tablets. In general they enable more flexible and powerful ways for small business to accept credit cards.
While they may appear to all work the same way, there are some key differences among them that both consumers and merchants should note in order to get the best and most secure experience.
Tips for Consumers:
- If the merchant is using a hardware accessory plugged into their phone, ask them if the data is encrypted or not.
- There are a few new players who use the camera to scan the credit card instead of using the swiper. The secure way of doing this is too only capture the main numbers off the card so your name and expiration date are not included. A couple of the new apps take a video of the whole card surface. If the merchant is scanning your card, be sure that they aren’t taking a video of the card.
- Confirm with the merchant that no data is stored on their personal device.
- Ask the merchant to send you an email receipt so that you can confirm the charge and have a record of it.
- Ask the merchant what name will appear on your credit card statement so it’s easy for you to recognize the charge – it should match the name of the business on the receipt.
- If the merchant is writing down your credit card information in addition to entering into the application you should ask them why they are doing this.
Tips for Merchants:
- Do you have to use a card swiper accessory with your phone? Emerging solutions eliminate the extra hardware and allow you to operate swipe free.
- Double check the fees you are paying. Many services advertise their low rate (i.e. 2.75%) but don’t tell you that they charge 3.5%+ if you don’t use the card reader.
- Card readers were designed for iPhones before the jack moved to the bottom of the phone. If you have an iPhone 5, they can be awkward and you may want to consider alternatives which eliminate reader.
- Does your service offer lower fees to process debit cards or charge the same rate for both debit cards and credit cards? Consumers use debit cards for 60%+ of card purchases in the U.S.
- Double check deposit timing. Many services advertise 1-2 day payouts but holdback your funds for long periods if you don’t use the reader or for large transactions.
- Do you get access to your customer’s email address after you send them the receipt or does the processor keep it?
- If you are trying new card scanning methods using the camera, be sure that it protects your customer’s privacy. Does it capture an image of the whole card or just the main numbers?