Accept Credit Card Payments on Your Phone in 7 Easy Steps

October 7, 2021

As smartphones become more and more ubiquitous across the developing world, the demand for simple and efficient mobile credit card payments is louder than ever.

By 2023, 25% of all POS transactions will be completed on a phone and mobile payments will more than double from 3% to 7% by 2022.

Companies that take initiative and provide mobile payments are slicing up more and more of the pie — especially in sectors like professional services and restaurants. Whatever your business is, accepting credit card payments by phone should be on your list of to-dos. It’s good business, not expensive to support, and will help you compete moving forward.

The thing is, how businesses actually get a mobile payment system isn’t always clear — especially if you aren’t working with a merchant services provider (MSP) already.

Do you need to get a merchant account first? Do you work with something like PayPal and pay higher fees? What equipment do you need? What are the best practices?

Never fear — we’re going to show you exactly how to start accepting mobile payments step-by-step.

Let’s go!

Step 1. Figure out what your business needs

No two businesses are the same, and everyone’s payment needs are different. If you only operate out of one office and accept all transactions outside of the office, then you probably don’t need a traditional terminal. Or if your business does in-home carpet cleans you’ll probably need mobile readers but not mobile terminals with comprehensive POS systems like a restaurant would.

You also need to balance the cost of your mobile systems against your existing system. Sure, supporting mobile systems can absolutely but be worth it, but be sure to weigh the costs of supporting them against its opportunity cost (what else you could do with that money).

On a basic level, you’ll need a formal relationship with a merchant services provider or third party payment processor (more on that on the next section) and the hardware/software to support mobile payments (found in step #4).

That being said, with any modern mobile payment system, you’ll want to be able to:

  • Accept transactions online and offline
  • Have centralized sales reporting and settlements.
  • Add tax as needed.
  • Record cash sales.
  • Have smooth integrations with accounting software.
  • Mobile invoices
  • Inventory management and the ability to create custom products easily.
  • Automatic and customizable receipts
  • Tip options
  • The ability to have multiple devices transacting simultaneously.
  • Accept contactless payments, Apple Pay, and Android Pay.
  • Accept all major credit cards with either magstripe or EMV chip.
  • Easy signature ability
  • Refund and chargeback functionality
  • Have the option to buy additional mobile readers at a good price
  • Ability customize the UI to your business’s needs.
  • Quick turn around on funds after mobile settlement.
  • Be able to manually enter card information

These are the fundamental components of modern mobile payment systems. The differences in choice lay in which companies offer the best versions of these features and what hardware you buy.

For example, online invoicing and business analytics reporting can vary widely in quality across mobile payment providers, whereas having tip options is pretty much a given when working with any company. Think about what you could bend on and what you couldn’t. Would you rather work with a company that is less design heavy but has incredible analytics or the other way around? Thinking about what your customers care about and what your business needs is important walking into this process.

Step 2. Decide whether to get your own merchant account or work with a third-party processor

The basic differences between merchant services providers (like Tidal Commerce) and third-party processors (like PayPal) are cost and whether or not you acquire your own merchant account.

Merchant accounts take a bit of work to get, but they are almost always worth it. Third-party processors don’t take as much work to get up and running, but they are much more expensive and your business will be restricted on the integration and security end.

Go here an entire blog on making the decision between merchant services providers and third-party payment processors.

Step 3. Choose a mobile payments provider

After you’ve made that decision, you need to choose a mobile payments provider. These are companies that offer a variety of merchant services and typically ask you to sign a contract of sorts where they take a small percentage of your revenue via transaction fees.

Typically you’re looking for a company with the right blend of pricing, tech, and support.

Here are a few best practices for choosing your phone payments provider:

  • Free app. Do they charge you extra for just using the app? They already make money from the transactions — don’t use companies like these.
  • Competitive rates. Mobile transactions shouldn’t be expensive. If anyone tries to go above 2.5% look the other way. On the other hand, if someone is offering 1.25% rates rest assured they are making that money off of you somewhere else.
  • Can accept transaction offline as well. We covered this below but make sure you don’t need internet for transactions!
  • Good customer and technical support. What are there service reviews like? Can you talk to someone who uses their service now?
  • Effective data and analytics. Business’s can’t make strategic decisions without data. Take a look at what they offer and make sure it gives you the flexibility you need.
  • Good hardware at the right price. Do they have their own hardware that smoothly integrates into their POS or mobile payments program? What’s the pricing like? Have an idea of what hardware you need and walk into those meetings with numbers in mind.
  • Custom integration abilities. While EMV integrations are a given these days, your business may use a varying network of different software — make sure your mobile payment provider is flexible and easy to integrate into whatever programs you need it to.
  • No high cancellation fees and/or predatory contracts. Low transaction floors or requirements or super high cancellation fees on long contracts are a big sign that you’re talking with a sketchy company. Payment providers should earn your business, simple as that.

Discover how you could save up to 35% on transaction fees and get equipped with the best in mobile payment solutions

Step 4. Make sure you have or acquire the right equipment

A lot of mobile payment providers have their own hardware and software as a sort of package deal, but this isn’t always the case. The representative you work with will definitely help you here, but at a basic level you’ll need:

  • Smartphone
  • Mobile reader
  • Point-of-sale (POS)

Step 5. Install the mobile app

Almost every MSP or provider has an app. Usually accepting transactions is as simple as downloading the app, logging into your account, hooking up your mobile reader, and running a card!

Step 6. Run a test transaction

No one wants to be stuck in front of a customer fighting with their phones. Whatever you do, make sure you run a test transaction before trying out your mobile payment solution during business hours. And even if your test transaction is fine, make sure each location has a backup solution if possible!

Step 7. Start accepting credit cards on your phone

At this point, you’ve made it! Now it’s back to a new and improved business as usual. Remember to always keep an eye out for when you’ll need new equipment, and make sure you have some extra readers on hand — you never want to lose a potential sale.

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