Which alternative payment system is best for your small business?
Payments for SMEs aren’t just about the cash, says Jen Münch, the UK managing director for iZettle. In an article for TechRadar titled How your organization’s payments solution can affect its business model, she says that “payments should no longer be seen as a distinct or standalone aspect of a business. It should be seen as an area which can bring in marketing data, enhance customer satisfaction, help with forecasting and cut down on admin.”
Most small businesses start out accepting only cash as a form of payment. It makes sense considering that cash is universal, familiar and still the leading payment method. But when their businesses grow, SME owners need to start investigating alternative payment methods in order to meet the needs of their growing consumer base. Let’s look at the benefits of each of the main alternative payment systems to cash, so that you can have a clearer understanding of which one would best serve your business objectives.
Mobile wallets and mobile payments
A mobile wallet is, essentially, the digital counterpart to your physical wallet. It contains all your card information as well as shipping details and can be used to make mobile payments either in-app, online or in-store. The benefits of mobile wallets and mobile payments follow…
- Convenience – Smartphones are inextricably linked to our daily lives, therefore using them to make payments is a logical next step in payments innovation. Mobile wallets are particularly popular among younger consumers such as millennials and Generation Z. Financial service providers and business owners alike are aware of this and have leaned into the mobile payments trend. Like McDonald’s and Starbucks, who have recently launched in-app ordering and payment. Amazon, not to be outdone, has announced Amazon Go, a chain of grocery stores where consumers can scan their smartphones at the entrance, shop and walk out without ever needing to reach for their smartphones again.
- Engagement – Mobile wallets and mobile payments give businesses another direct communication channel to their customers. By leveraging technologies like geofencing and beacons, you can start talking to your customers as soon as they enter your store or a predetermined radius around it. You can wish them a happy birthday and offer them a complimentary gift, promote certain products based on their purchase history and also relay information regarding loyalty programmes and flash sales.
The global mobile POS market is forecasted to ship 240 million units by the year 2022 and it is reshaping whole industries as it goes. Some of the advantages of mPOS systems include:
- Cost – mPOS systems involve a lot less equipment, they are comparatively more affordable than traditional POS systems, and some, such as ZipZap, are even available to rent. And if your monthly transactions exceed R25 00, you don’t have to pay your rental fee. This makes them ideal for small vendors who are unwilling to make the capital commitment that traditional POS systems require.
- Mobility – mPOS systems can be taken anywhere, making them an asset for any mobile business. Additionally, they encourage traditionally “fixed” businesses to explore mobile opportunities to drive revenue. Mobility of a POS system makes the buying experience more convenient for consumers and vendors and enhances overall customer experience.
- Analytics – By leveraging cloud integration and digital data analytics tools, you can maximise on real-time reporting and respond to buying trends almost as they happen. Metrics gathered from mPOS transaction data can be used to inform on-the-spot upsells, future marketing campaigns and business strategies.
The growing usage of newer payment systems doesn’t signal the end of traditional POS since these alternatives actually enhance the functions of fixed POS systems. This is because traditional POS still has significant perks, a few of which are:
- Security – Because traditional POS systems have been around for so long, their security policies are well-established. They also don’t use cloud servers, which makes them less susceptible to malware and intrusions.
- Robust capabilities – When connected to other peripherals, such as a cash register and a barcode scanner, traditional POS systems can process high volumes at impressive speeds. This makes them perfect for businesses that regularly and quickly process a large number of transactions.
- Familiarity – Customers and retailers are familiar with traditional POS systems (although that’s changing in the younger market). Familiarity makes transactions faster and more comfortable for both parties.
- Upgradeable – Most importantly, traditional POS is evolving along with other methods of accepting payments. For example, Paycorp’s Verifone EFTPOS terminals are equipped to accept contactless payments, giving customers even more freedom of choice and proving that traditional POS is, indeed, here to stay.