Last updated on Nov 8, 2023
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Hardware costs
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Software costs
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Transaction fees
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Compliance costs
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Customer service costs
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Here’s what else to consider
Mobile payment systems are becoming more popular among consumers and businesses, as they offer convenience, security, and speed. However, implementing a mobile payment system for a small business is not a simple or cheap decision. There are several costs involved, both upfront and ongoing, that need to be considered before making the switch. In this article, we will explore some of the main costs of adopting a mobile payment system for your small business.
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1 Hardware costs
One of the first costs you will face is the hardware needed to accept mobile payments. Depending on the type of mobile payment system you choose, you may need to buy or rent a card reader, a tablet, a smartphone, or a point-of-sale (POS) terminal. Some mobile payment providers offer free or discounted hardware, but others may charge you a monthly or annual fee. You also need to consider the maintenance and replacement costs of the hardware, as well as the compatibility with your existing equipment and software.
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- Ming Johanson Mother of Unicorns | CEO @Marketing Jumpstart | Director of Media @DDD Perth | Media Contributor | R U OK Ambassador | Winner Women In Tech+ Award
Most of my life and transactions hits online, as in I don't have to leave my chair to transact for money. My partner is a musician, and he had a gig so we did what any small business owner might do and bought a Square from the local officeworks. This cost less than $50 at the time and was free and extremely easy to set up - I was ready to go and sell CDs and merchandise in 30 minutes. For intermittent transactions this has been great! For large scale transactions investigate banks and their fees per transaction.
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2 Software costs
Another cost you will incur is the software required to run the mobile payment system. You may need to download an app, subscribe to a cloud service, or integrate with a third-party platform. Some software solutions are free or low-cost, but others may charge you a monthly or annual fee based on the features, the number of transactions, or the number of users. You also need to consider the security and reliability of the software, as well as the updates and upgrades.
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3 Transaction fees
The most obvious cost of implementing a mobile payment system is the transaction fee. This is the percentage or flat fee that the mobile payment provider charges you for each payment you process. The transaction fee varies depending on the provider, the payment method, the amount, and the location. For example, some providers may charge you more for accepting credit cards than debit cards, or for processing international payments. You need to compare the transaction fees of different providers and find the best option for your business volume and type.
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4 Compliance costs
Another cost that you may not be aware of is the compliance cost. This is the cost of meeting the legal and regulatory requirements for accepting mobile payments. For example, you may need to comply with the Payment Card Industry Data Security Standard (PCI DSS), which sets the rules for protecting cardholder data. You may also need to comply with the tax laws, the consumer protection laws, and the anti-money laundering laws of your country and region. You need to consult with a professional or a mobile payment provider to understand your compliance obligations and costs.
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5 Customer service costs
The final cost that we will discuss is the customer service cost. This is the cost of providing support and assistance to your customers who use the mobile payment system. For example, you may need to handle refunds, disputes, chargebacks, fraud, and technical issues. You may also need to educate your customers on how to use the mobile payment system and how to benefit from its features. You need to allocate enough time and resources to deliver a high-quality customer service and ensure customer satisfaction and loyalty.
Implementing a mobile payment system for your small business can bring many benefits, such as attracting more customers, increasing sales, and improving efficiency. However, it also comes with many costs, both upfront and ongoing, that you need to consider carefully. By doing your research, comparing your options, and planning your budget, you can find the best mobile payment system for your small business and optimize your return on investment.
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6 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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One great example of how India has been successful in implementing the paper-less billing is introducing a revolutionary mobile application called 'PhonePe' that enables us to pay or receive money digitally throughout the country whether it be shopping, paying bills, buying tickets on-the-go by simply scanning the QR code of that business or entering recipient's phone number. This app adapted cloud infrastructure optimization, automation and microservices architecture, content delivery network and robust security with Payment Gateway optimization while reducing latency and turn-around-time for high speed, secured transaction. This is a wonderful example of financial inclusion through digitization regardless of one's economical background.
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- Steve Leung 5x AWS Certified | IT Consultant
Timely article as recently, one of Australia's largest telecommunications network experienced a massive nationwide outage on mobile, internet and EFTPOS.So you need to consider whether you want your business to operate solely on cashless payments.What is your backup plan in case mobile payment is unavailable?What is the cost to your business, if you couldn't trade for one day?Research your vendor, what is their Service level agreement?Will they offer compensation for loss in trade?What backup options do they offer? Are they public about their readiness for disaster events i.e do they regularly simulate a failure or event to test systems, processes, and team responses
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