Mobile Payment Alternatives: The Future of Payments
Posted October 27, 2011
PayPal may be the standard online payment system for many companies, but a few new competitors have risen in popularity. In 2010, PayPal processed about $92 billion dollars, according to Portfolio. Online or alternative payment services will increase in the future as more business is conducted online: up to $355 billion in 2012, according to E-CommerceTimes.
PayPal’s fees for receiving money and other policy quirks can complicate simple transactions. Given the large increase in alternative payments options, some of these may better for you than PayPal. Compare the following programs and decide which one is the best alternative to PayPal.
Square: Square card readers can make financial transactions more mobile-friendly for offline retailers. For customers that use smartphones as digital wallets, this is great. Digital wallets or e-wallets are like regular wallets, but store user information, redeem digital coupons and make purchases. Users swipe their phone on or near special equipment, so merchants can make transactions. The digital wallet concept is a popular concept outside of the US, but look for more Square card readers to pop up.
Cost: The only is fee is 2.75% of each credit card charge. There are no other ongoing fees. The app version of the reader is free and the physical reader is pretty cheap (less than $15) depending on where you buy it.
Innovation: The service was designed with mobile users in mind, so business owners who depend on making and receiving money through smartphones and tablets should rejoice.
1. PopMoney: The site was developed by a group of credit unions, banks and Cash Edge, an experienced money management company. PopMoney provides a direct connection to a bank account, which decreases the amount of time it takes to process transactions. This is a big improvement over PayPal’s lag times, which can take as long as 4 days to process to bank accounts.
Cost: Receiving money is free, but fees for other transactions vary according to each bank.
Innovation: It recently won a Monarch Innovation Award due to its compatibility with small business needs. Businesses make transactions through a bank without exposing their private account information. Vendors send and receive money through email addresses, texts or bank accounts. Best of all, the other party doesn’t have to be signed up with PopMoney. Set up automatic deposits to simplify regular deposits from clients. See if your bank is signed up with the service here.
2. Serve: American Express launched the payment service Serve in the spring. The site allows businesses to setup an online account at the site or with a phone app. American Express also gives users prepaid cards to load funds, which is linked to the online account. These cards will be accepted wherever American Express credit cards are.
Cost: Fees include a $2 fee per ATM withdrawal after one free monthly withdrawal. Serve users can make transactions amongst themselves for free, but other fees are unknown. Adding more money to the account with a credit card incurs a 2.9% fee on the transfer amount and $0.30 per transfer. Registration is free.
Innovation: More business-friendly features on Serve are sure to come when American Express opens its Enterprise Growth Group, a new initiative that will expand alternative payment features for businesses. No matter how your clients or vendors send or receive payments, one of Serve’s many methods is sure to appeal to them. These options increase flexibility without requiring much effort from you or the other party.
Offering a variety of transaction options can increase sales, according to E-Commerce Times. Try each service and see how well it works with your business. Get their feedback on any problems on their end. Their experiences will help you figure out if a certain service is right for you.