Note: This is a guest article provided by Amy Nielson, a freelance blogger writing for Merchant Maverick ^[2]. You can follow her on Twitter @Nielson_Amy.

Business is becoming more interconnected with the virtual world by the day. People are traveling more, they’re getting busier, and they need all of the conveniences that modern life provides. For most, it’s much simpler to carry a debit or credit card ^[3] than to worry with cash, and business owners need to cater to consumer habits in order to stay ahead. Unfortunately, credit terminals are expensive (unless you’re using a PerkStreet debit card ^[4] or one from Ally Bank ^[5]!), and so are many electronic payment systems. Smartphones offer an alternative ^[6], and it’s easily the cheapest option for anyone who needs a hassle-free merchant solution.

The Cost of Free; Picking the Right App

While smartphones don’t enable someone to sidestep transaction fees, many of the available apps are free. Android and iPhone users both have access to an app called Credit Card ^[3] Terminal, and it performs all of the basic functions that a business owner would require. That doesn’t mean that paid apps are always a bad deal, but business owners need to account for the features they need before they decide which app is for them. Just make sure that your numbers always square up ^[7].

^[8]

Merchant Accounts

Attaining a merchant account requires the proprietor to have a business checking account ^[4] with the bank where he wants to open a merchant account. Merchant accounts are specialty offerings that enable the account holder to accept electronic payments in exchange for goods and services. While smartphone technology is amazing, it only works when it’s linked to a merchant account, and the price of running an electronic payment system will hinge on the terms set by the bank.

There are countless variables that need to be examined before choosing a merchant account. The service, fees and terms can be drastically different depending on the provider, and it’s easy for small business owners to end up paying more than they should. It’s an incredibly complex financial undertaking, and it’s imperative that business owners educate themselves ^[9] before agreeing to anything.

PayPal and Other Electronic Payment Services

Those eager to get a start in the business world can give themselves a leg up by using the PayPal app. While it doesn’t enable someone to accept credit cards ^[3] directly, it does allow business owners to bill people for their services. It also makes it easy to purchase things from eBay and Amazon, and performing both incoming and outgoing business transactions within the PayPal app may be one of the easiest ways to manage business income flow.

There are plenty of other tools that can serve similar functions. While they might not be directly related to receiving payments, they can make it far easier to manage someone’s finances on the whole. Business owners may be hesitant to make the jump for security reasons, but most of the available apps are as secure as any computer program, and the convenience of a smartphone that serves as an all-in-one financial management tool is not something that’s easily overlooked.

Smartphones as Currency?

Something to take into account when setting up an electronic payment system is that people may soon be using their credit cards ^[3] through their phones ^[10]. This has already become common place in countries like Japan, and new cell phones are coming to the US that will enable consumers to charge transactions by scanning their phones at kiosks.

Current smartphones may not be equipped to handle these kinds of transactions. Business owners who want to be on the cutting edge will probably need to purchase the new credit-enabled phones when they start trickling onto the market over the next few years. It’s not something that has to be accounted for within the immediate future, but it is undoubtedly something that everyone will have to adapt to within the decade.

Uncharted Roads

Technology has reached a tipping point where it’s impossible to predict exactly what smartphone will be capable of in five or ten years. Regardless, what is available now makes running a business far simpler than it has ever been, and while smart business owners should keep an eye on the future, they should also take advantage of what’s available now.

About the author

Ron has written 1082 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[11] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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