Let’s talk about Mobile Point of Sale (mPOS) versus mobile payments (mPayments).
In the last 5 years, mobile point of sale and mobile payments technology have made quantum leaps, opening a whole new world of opportunities for retailers. Mobile POS systems and mobile payments are two things that are commonly talked about, but it’s not always clear what each exactly means. While the terms “payment” and “point of sale” offer some level of clarification between the two, the options that are available in the market for each are so varied that most business owners can’t quite explain the difference. The problem, however, is that if you don’t know the difference, it’s time to choose your point of sale technology, then you’ll find yourself making the same costly mistake as most small business owners out there. And we don’t just mean in terms of dollars and cents. Choosing the wrong point of sale technology can mean less flexibility with a credit card processor at higher rates, a lack of robust reporting tools that influence better business decisions, and an inability to accept new cutting-edge mobile payments technology such as Apple Pay and other NFC payments. So with that said, how do you differentiate between the two and ensure that you are making the right choice? We’ve outlined what you should know about each below.
Mobile Point of Sale
Mobile point of sale – also often referred to as mPOS – is a tablet, smartphone, or similar wireless devices such as an iPod, that serves the function of a traditional cash register or POS system in brick and mortar businesses. Traditionally, cash rendered for goods and services were accepted and accounted for at the cash register and then tracked and reported on manually by bookkeepers. Modern retail and payments technology has completely shifted and optimized this process, saving time for business owners and providing flexibility. Mobile Point of Sale refers to both the physical (hardware) and intangible (software) features of these payment systems. The greater majority of mobile pos companies utilize tablets like the iPad because of its reliability and design; they’re less bulky than the traditional PC-based point of sale, but large enough to comfortably capture sales and customer information. iPad POS systems like ShopKeep have become the preferred choice for accepting payments for growing small businesses. They provide the flexibility to accept payments on a sophisticated system from a stationary position, on the counter, or around the store (mobile). Also, they include a set of simple analytics tools that just about any business owner can utilize to spur retail success.
Mobile payments refer to the many payment options that are now available to consumers via mobile devices including mobile POS. These include mobile wallets or mobile money, mobile money transfer, and peer-to-peer payments, so it’s a very broad concept.
Mobile Wallets are exactly what the name suggests: software on mobile devices that allow consumers to store their credit and debit cards digitally to pay for things at retailers – online and offline. Instead of physically carrying cards in your wallet and swiping them on point of sale and credit card terminals, consumers enter their cards of choice within the app and pay with technology like NFC or by ‘checking in’ to the store and authorizing the payment. Some popular mobile wallets in the market today are Apple Pay, Google Wallet, and Paypal.
Mobile money transfer is a service that allows you to make a person-to-person transfer. So essentially, you can send someone money virtually, without physical cash ever changing hands. These services simply require you to enter a source of payment, a card or bank account, and a destination for receiving payments – your bank account of choice. Though this is a person-to-person transfer, many less complex businesses such as home-based businesses use this option to receive payments from their customers, as it’s easy to set up and requires no additional hardware.
Peer-to-peer payments is a form of mobile money transfer but is not targeted to businesses. It’s more common for sending small dollar amounts to friends for routine transactions such as splitting a cab or paying a friend back for lending you some cash. They’re instant transfers that are very easy to make. A popular example of this type of service is Venmo. The last type of mobile payment is a mobile card reader like Square or Paypal Here. These services function with an app and plug-in credit card dongle that is inserted into the charging port or headphone jack of a smartphone. They function as a credit card terminal essentially, with the ability to move them away from the counter, but without the sophistication or sales insights that a true point of sale provides.
Which is right for your business?
Now that you know the difference between mPOS versus mobile payments, the question is which is best for your business. That depends on what your specific needs and goals are, but this should help: If you aspire to have a growing and successful business, you’re going to need a set of tools to help you analyze and understand the many moving parts. Point of sale, in general, was designed for this purpose. It was installed in thousands of businesses, to help retailers understand their exact sources of revenue, help streamline various aspects of operations such as employee and inventory management, and of course – accept various forms of payments. Thus, mobile point of sale is necessary for the type of business owner that wants control and the ability to manage and grow the business. If you provide a product or service as a hobby or as a source of supplemental income, then mobile payments may be all you need. They don’t require a great start-up expense at all – be it time or money. However, keep in mind that they also don’t provide as much, if any at all, data or insights about how your business functions and makes money. Hopefully, this reduces the confusion and helps put you on the path to making the best choice for your small business. Let us know your thoughts in the comments section below.