IT services and solutions for retail and hospitality

  • 20 Feb 2012

Guest Blog: Top 5 Retailer FAQs on Mobile Payment

By Michael Koploy, Software Advice

According to US research advisory Gartner, mobile payments may be the next big thing for retailers. The firm predicted 38 percent growth of mobile payment users in 2011, totaling 141 million.

While this may seem like a lot, the industry still has a long way to go and there are a number of roadblocks ahead, according to Sandy Shen, Gartner Research Director. “The biggest hurdle is the need to change user behaviour by convincing consumers to pay with mobile phones instead of cash and cards”.


Retailers can play a large role in changing user behaviour. While manufacturers can produce the phones to process mobile payments and merchant service providers can set up the networks, a lack of retailer support will lead to little (if any) mobile payment adoption.

The first step for retailers is to educate themselves about the technology, the ecosystem and the opportunity mobile payments afford. Software Advice, an online consultancy for retail solutions, hears from a lot of retailers that are curious about mobile payments. Here are the top five questions with their answers:

(1) What are mobile payments?
Mobile payments are payment transactions involving mobile devices and RF receiver terminals. Both mobile devices and terminals are equipped with RF chips to communicate via near field communication (NFC). The mobile devices communicate with the terminals through a virtual wallet application.

(2) What does a retailer need to do to accept mobile payments?
Outside of the other requirements for retailers to accept credit card transactions — merchant account, payment gateway, point of sale software, etc – retailers will need either an NFC-capable credit card machine or a standalone NFC receiver. Standalone receivers are often much cheaper – sometimes as little as a couple of hundred US dollars.

(3) How much will mobile payments cost the retailer?
The interchange rate for mobile device payments is the same as MasterCard PayPass and Visa payWave; the rate is higher for these transactions than for traditional swipe-and-sign payments. Visa lowered rates to spur NFC in Italy – it could do something similar elsewhere, but this is unknown at present.

(4) Are there security issues that retailers need to be aware of?
NFC signals are transmitted at a short range of a few cm (and up to a few metres in some rare circumstances), so the hacker would have to be close to the mobile device, as well. Additionally, virtual wallets require PIN passwords for access -making a stolen virtual wallet much less valuable than a stolen credit card. Most phones also have additional security features, such as home screen password-lock.

(5) What should a retailer do to prepare for mobile payments?
All of the individual players in this ecosystem–from the financial institutions to the consumers–are playing a game of wait-and-see. Retailers can do well by staying on-top of NFC-related news and testing out similar technologies available today (e.g. Google Places), as well as other NFC happenings in the community.

For a full list of the top ten FAQs, check out Software Advice’s Mobile Payments: FAQs for Retailers.

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