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What are mobile payments and how can your business use them?

10 minutes

Experts predict that by 2024, one-third of all point of sale transactions will occur via mobile payment. What are mobile payments? Mobile payments allow users to rapidly pay for goods or services using mobile phones or other wireless devices.

For America's business owners, the rise in the popularity of mobile payments demands adaptation and innovation. This article will provide a quick overview of mobile payments and how you can start accepting mobile payments in your business.

What are mobile payments?

A mobile payment is any financial transaction that occurs through a smartphone or tablet. This technology allows you to make mobile bank transfers between bank accounts, as well as make payments through your mobile phone.

Mobile payments can include a variety of different types of transactions, which can broadly be broken into four types of mobile payments:

Peer-to-peer payments

Some mobile payments take the form of payments sent from one person to another. This approach is a great way to pay friends or send payment to a vendor or business partner.

For instance, many banking apps allow you to send money from one bank account to another. The advantage is that you and your recipient don't need to share the same bank or credit union, nor do you need merchant accounts to use this service.

As long as you know some basic information about the recipient's bank account, you can send money more easily than you could using traditional wire transfers.

App-to-app transfers

Some payment apps have made the process of peer-to-peer payments even easier. Users can make mobile money transfers using apps like Venmo or Zelle or through payment processors like PayPal.

Both parties have to have the app (or an account through the provider), but the advantage is that you can complete the transfer with nothing more than the recipient's email address.

Barcode transfers

Other forms of mobile payment allow users to pay for goods or services using only their mobile phones. This technology allows users to make in-store payments, just as they would use a credit card.

Barcode transfers represent one way to do this. The customer can present a bar code on their mobile device, which the merchant scans. This interaction transfers the money instantly from the buyer's account to the seller, though the seller will need to use an intermediary service to facilitate the transaction.

Contactless payments

Modern retailers increasingly accept contactless payments for in-store payments, using "near field communication" or NFC technology. Customers simply wave their mobile phone (or even their smartwatch) over an NFC-enabled payments terminal. This NFC connection allows merchants to accept mobile payments during checkout.

What is a mobile wallet?

The mobile wallet lies at the heart of mobile payment systems. As the name suggests, a mobile wallet is simply a digital wallet that can be accessed through your phone.

Using a mobile wallet app, you can securely add the details of the bank account associated with your credit or debit cards. Most mobile wallets allow you to enter multiple credit and debit cards, which you can then select through the menu of the mobile wallet app.

Once you have your credit and debit cards stored in your mobile wallet app, you'll be equipped to make purchases just as you would with your physical credit cards. Only now you can use your phone to make mobile payments at participating retailers.

Common examples of mobile wallet technology include:

  • Apple Pay
  • Google Pay
  • Samsung Pay

There are additional mobile wallets available from other third-party payment services, though the above three are the most common.

How do mobile payments work?

Mobile payment systems work differently depending on whether you're transferring money or making a purchase.

Peer-to-peer payments

Mobile money transfers are the most straightforward. Simply download a mobile payment app like Venmo or Zelle. If the person you're paying also has the app, you simply need to know their basic contact information, and then you can send money electronically.

If you use an app like Apple Pay, it's even easier. All you have to do is open the relevant conversation in your messages folder, and hit the Apple Pay button to send them money. Again, this requires the recipient to also use Apple Pay.

NFC mobile payments

Contactless mobile payments work a bit differently since they require a point of sale (POS) system that accepts near field communication (NFC) payments.

NFC technology is really just a subset of radio-frequency identification (RFID). NFC payments use a specific frequency to pass encrypted payment information back and forth between your mobile device and the payment terminal. The two devices only need to be within about two inches from one another to work, but the transaction occurs in a fraction of a second.

The advantages of mobile payments

Mobile payment technology is here to stay — and for good reasons. Here are just a few reasons why both customers and businesses have come to love mobile payments:

Mobile payments are convenient

Sometimes, your mobile wallet is more reliable than your physical one. Shoppers who realize they don't have their physical card can simply pull out their phone or mobile device and make purchases anywhere that accepts mobile payments.

Mobile payments help working professionals

Mobile pay is also great for freelancers and other professionals. When you accept mobile payments, it makes it easier for your customers and clients to pay you for your work. That translates into better cash flow for you and your business.

Mobile payments are fast

In an age of instant gratification, speed is king. Mobile payment technology allows you to send money faster than when you swipe or insert credit/debit cards.

For business owners, this can offer a competitive edge, allowing you to do a greater volume of business than ever before. Customers may also appreciate knowing that the transaction occurs immediately and that they can receive a paperless receipt following the sale.

Mobile payments are secure

While no payment method will ever be 100% secure, mobile payments offer a layer of security not found in major credit cards. That's because instead of using your actual credit/debit card data, a mobile payment system will encrypt your payment data to protect it from unfriendly eyes.

Plus, your mobile phone already contains numerous security features, such as a fingerprint scanner, facial recognition, and more. These features mean your mobile wallet can be more secure than your physical one.

Mobile payments are environmentally sound

When you use mobile pay, retailers can skip the paper receipt and send you an electronic copy through your email. That means a lot less paper is consumed by retail sales and transactions.

Therefore, mobile payments are another way that small business owners can demonstrate a commitment to environmental sustainability, a passion that many customers might share.

How to accept mobile payments

There are several different options to start using mobile pay:

Download an app

The absolute simplest way to accept mobile payments is to simply download one of the apps that support mobile money transfers. This list includes apps like:

  • Venmo
  • Zelle
  • PayPal

These are just some of the most popular ones. Some apps also have other integrated features that make them ideal for small business owners.

Invest in a point of sale system

For retailers and restaurant managers, you'll need a dedicated point of sale system that allows you to accept payments using mobile pay.

Chances are you already accept credit cards, but accepting payments from mobile devices will need a point of sale platform that can support mobile payments. Specifically, you'll need the NFC technology required to accept contactless payments.

You'll also need a payment gateway, which will equip you to process mobile transactions as well as credit/debit cards.

The best mobile payment apps of 2022

Small business owners have a wealth of mobile payment systems to choose from. Here are some of the top payment apps of 2022:

Apple Pay

For most consumers, Apple Pay has become synonymous with mobile transactions. Apple Pay offers generous transaction limits (weekly limits of $10,000) as well as reward points and the capacity required to handle international payments.

However, Apple Pay is only compatible with an iOS device, which means that those who use a different mobile device will be unable to use Apple Pay altogether.


Invoice2go offers a specialized payment system aimed at small business owners, freelancers, and other professionals. You can use Invoice2go to accept payments both in-person and online.

Invoice2go pairs with the PayPal payment processor, which ensures that the funds you receive from your clients are in your bank account within 3 to 5 business days.

Best of all, Invoice2go offers additional features, giving users the ability to:

  • Create and send professional invoices
  • Get paid faster with automated payment reminders
  • Accept credit, debit, and PayPal payments

Your clients' payment information can also be stored, making it easier to send invoices and receive payment for recurring projects.

Circle Pay

Circle Pay is a mobile payment solution aimed at eCommerce businesses. This mobile payment service allows users to collect payments with USD Coin, a regulated form of digital currency backed by cash as well as U.S. treasury bonds.

Unlike other payment services, Circle Pay doesn't offer any form of reward points or other incentives.

Google Pay

Google Pay is commonly recognized as the alternative to Apple Pay. While Apple Pay can only work on iOS devices, Google Pay can be used on any mobile device. Google Pay offers the same sort of fast, secure payments you'd expect from a tech giant, and many users are already familiar with the intuitive interface.

QuickBooks GoPayment

QuickBooks GoPayment (formerly Intuit GoPayment) offers seamless integration with Intuit's suite of accounting and small business tools. This integration connects the payment process to your company's other financial needs, allowing you to process transactions as well as manage your inventory.

Samsung Pay

Samsung Pay is yet another payment platform, and like Apple Pay and Google Pay, Samsung Pay can be used with any compatible NFC credit card reader. It offers chat support and other features, but some users find its funds transfer speed to be lacking.

Accept mobile transactions

Want to take Invoice2go for a test drive? Sign up for a 30-day trial, and you'll gain access to the payment services that countless business owners have used to grow their companies and manage their cash flows. No credit card is required, and you can cancel anytime.

Frequently asked questions

Do you have additional questions about how mobile payment systems work? Here are answers to common questions about mobile payments:

Are contactless payments secure?

Believe it or not, NFC contactless payments are more secure than most credit card payments. That's because the information contained in the magnetic stripe on the back of your credit or debit card is static, meaning it never changes. However, the data transferred back and forth during an NFC transaction is dynamic, meaning it's constantly changing.

Apple Pay is even more secure since it relies on a process known as "tokenization." Once you upload your credit card details into the app, Apple will send the details to the bank that issued your card.

They will replace your credit card number with a new, randomly-generated series of numbers called the "token." This tokenization means that when you use this payment method, you won't be using your credit or debit card number, but rather this new randomized token, providing an added layer of security.

Can I use more than one credit card in my mobile wallet?

Most mobile wallets can accommodate more than one credit card. Depending on your digital wallet, you may need to specify which credit card you prefer to use when making a contactless payment.

Just make sure to update your mobile pay settings when you receive a new credit card. Mobile pay features will no longer work once your credit card expires.

Will I receive the same reward points when using mobile payments?

Many credit card companies offer users incentives for using their cards. For instance, some card issuers offer cash back rewards or points that can later be exchanged for hotel accommodations or other perks.

These rewards are available regardless of whether you use mobile pay or a physical card. While your card is not present at the point of sale, the mobile payment technology still accesses your card to complete the purchase, granting you the same rewards and privileges.


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