Accepting Credit Card Payments on a Mobile Phone

The ability to accept credit cards and debit cards at the point of sale (POS) is a must for small businesses today. In an increasingly cashless society, customers expect to pay for goods and services with their cards. An in-store ATM doesn’t cut it; customers want quick and easy payment options.

Unfortunately, investing in a credit card terminal or POS system can be expensive. For some small businesses, these systems might be overkill. Luckily, there are payment processors that allow you to accept credit card payments using your phone. All you need is a mobile application and a credit card reader.


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Can I take credit card payments on my phone?

You can accept credit card payments on your phone by partnering with a payment processor that offers mobile credit card processing solutions. Some of the most popular brands are Square, SumUp and PayPal, each of which offers mobile credit card readers and pay-as-you-go terms specifically for mobile credit card processing.

Generally, you download an application from the processor and provide basic information about your business to sign up for an account. Many processors will send you a free mobile credit card swiper so you can begin accepting payments, but you should order a mobile credit card reader that accepts chip cards as they deter counterfeit fraud, and using them protects you from liability if you unknowingly accept a counterfeit card.

Mobile credit card readers connect to your phone either by Bluetooth or through your phone’s headphone jack. When you accept card payments, the transactions are encrypted and transmitted to the processor, and no sensitive card data is stored on your phone. After the transaction is settled, the money from the transaction is deposited into your bank account, less the processor’s fee.

Accepting mobile credit card payments offers businesses a cost-effective way to accept payments by card. It also offers businesses the ability to accept cards at events or throughout their establishment, such as a restaurant that accepts payments tableside. For businesses that don’t yet accept credit card payments, opening an account and purchasing a card reader from a payment facilitator such as Square, SumUp or PayPal is an easy solution. For larger businesses that are already processing credit cards using a POS system, mobile credit card payments can generally be set up through their current full-service payment processor.

Working with a payment facilitator is generally easy and straightforward. Most businesses are simply required to fill out a form online. There are often no credit checks or requirements to submit processing statements or marketing materials, which is helpful for businesses looking to accept credit cards for the first time.

Partnering with a full-service processor for mobile credit card payments can be trickier, as you will need to apply for an account. These vendors require more information and documentation, but sales reps are eager to work with you, and often offer to help you fill out the application over the phone. Once your application is submitted, there is often a waiting period prior to approval. If you don’t meet the processor’s standards, your application could be rejected.

How much does it cost to accept credit cards?

There are three main pricing models you’ll likely encounter when researching the credit card processing industry. Which model works best for your business often depends on the type of business you run, and the volume and value of your credit card transactions.

If you work with a payment facilitator like Square, SumUp or PayPal to accept credit cards using your phone, you will pay flat-rate pricing. If you choose to work with a full-service credit card processor, you will often have a choice of interchange-plus or tiered pricing. Here’s how each pricing model works.

  • Flat-rate pricing: Flat-rate pricing is the simplest pricing model. Although its rates often look higher than what you see advertised for the other pricing models, there are usually no additional fees and no lengthy contracts, which make it a better value for businesses that process less than $3,000 per month. Flat-rate pricing is usually expressed as either a flat percentage of the transaction value or a flat percentage plus a small per-transaction fee.
  • Interchange-plus pricing: With interchange-plus pricing, the customer pays what is known as the wholesale rate along with a processor markup. The wholesale rate consists of the interchange fee, a rate set by the card networks that all processors must pay, and the assessment fee, another non-negotiable rate charged to processors by card brands. The processor’s markup in this model represents their profit on facilitating your credit card transactions. The markup is the only negotiable part of the price, and it’s the rate you will be quoted when you call for pricing. This pricing model is favored by industry experts because of its transparency.
  • Tiered pricing: Tiered pricing packages categorize all transactions into tiers: qualified, midqualified and nonqualified. Qualified transactions are basic credit or debit cards swiped at the point of sale; these have the lowest rates (and this is usually the rate that is advertised by the processor). Midqualified transactions are usually rewards cards swiped at the point of sale. Nonqualified transactions often include premium rewards cards, corporate cards and keyed-in or card-not-present transactions (such as cards accepted over the phone); these are the most expensive rates.

Ultimately, the rates you pay will be influenced by your monthly processing volume, your average transaction value and the industry your business operates in. Processors may consider your payment processing history, as well as your business and personal credit, when determining rates. Keeping these factors in mind, you can expect most processors’ rates to range from 2% to 4% of each transaction.

What is the best way to accept credit cards?

While most payment processors will send you a free mobile credit card swiper that reads the magnetic stripe on cards, it is wise to invest in an EMV-compliant card reader. EMV chips work with card readers to encrypt the transaction data and protect it while it is in transit; EMV chip cards are much more difficult to counterfeit than magstripe cards.

EMV-compliant readers have become the standard in credit card and debit card transactions; failing to employ one opens your business to liability for any counterfeit fraud that results from unwittingly accepting a counterfeit card while using a card swiper.

Even though they’re not free, EMV-compliant mobile card readers are generally very affordable, costing between $20 and $50. The best mobile card readers are also NFC-enabled. NFC stands for near-field communication, and it allows you to accept contactless forms of payments, such as those from digital wallets like Google Pay or Apple Pay as well as contactless cards.

Accepting credit cards on iPhone vs. Android

The best mobile credit card processors offer applications that are platform agnostic. These apps work across all devices and on IOS and Android operating systems. Some processors work exclusively with one platform, but most companies have mobile apps for both iOS and Android.

Some applications offer different functionality based on the operating system though. Apple’s iOS, for example, tends to be more popular, thus some processors give the iOS-based mobile applications more attention and more frequent updates. However, some mobile apps vary more in functionality based on the device itself rather than the platform. For example, some mobile payment processing apps are more feature-rich on a tablet than on a smartphone.

Mobile credit card payments improve POS transactions

Accepting credit card payments on mobile devices offers benefits to businesses small and large. For new businesses or small businesses on a budget, mobile credit card processors lower the barrier to entry by cutting costs, allowing virtually anyone to accept credit card payments from their customers. For established businesses that frequently travel to trade shows or that want to offer convenience and flexibility to their customers, mobile credit card payments serve to increase sales and boost customer satisfaction.

Whatever your reason for accepting mobile credit card payments on your phone, you have many options. It’s important to choose a credit card processor or payment facilitator that offers advantageous terms as well as a user-friendly and effective mobile app. Once you find the right vendor partner for your mobile card transactions, consider investing in hardware that is EMV-compliant and NFC-enabled.

By following these tips, you’ll be processing mobile payments in no time. Your customers – and your bottom line – will undoubtedly thank you.