Business News Daily receives compensation from some of the companies listed on this page. Advertising Disclosure


10 Mobile Credit Card Processing Myths Busted

Sara Angeles

Mobile credit card processing is way cheaper than traditional point-of-sale (POS) systems. Accepting credit cards using mobile devices is stressful, not to mention a hassle to set up. And customers would never dare compromise security by saving or swiping their credit cards on a mobile device.

Those are just some of the many myths surrounding mobile payments, which allow merchants to process credit card payments using smartphones and tablets. Merchants process payments using a physical credit card reader attached to a mobile device or by scanning previously stored credit card information from a mobile app (as is the case with mobile wallets). Benefits include convenience, a streamlined POS system and access to a breadth of business opportunities based on collected consumer data. Nevertheless, mobile payments as a whole remains a hotly debated topic among retailers, customers and industry experts alike.

Consumers are steadily shifting their preferences as an increasing number of merchants implement mobile payment technologies (made easier and more accessible by major mobile payment players such as Square and PayPal). To stay competitive, it's more important than ever for small businesses to stay current and understand where mobile payment technology is headed. If you're considering adopting mobile payments or are simply curious about the technology, here are 10 mobile payment myths that you may have heard, but are completely untrue. [How to Accept Mobile Credit Card Payments From Anywhere]

Myth #1: I already have a POS system — the hassle isn't worth it.

Mobile payments offer more flexibility to reach the customer than ever before. No longer are salespeople tied to a cash register and counters to finish the sale. That flexibility can mean the difference between revenue and a lost sale. Mobile payments also have the latest technology to track sales, log revenue, fight chargebacks, and analyze performance quickly and easily. — Tom Tesmer, chief operating officer, Calpian Commerce.

Myth #2: Setup is difficult and complicated.

Setting up usually just involves downloading the vendor's app and following the necessary steps to get the hardware and software up and running. The beauty of modern payment solutions is that like most mobile apps, they are built to be user-friendly and intuitive so merchants would have little trouble setting them up. Most mobile payment providers offer customer support as well, so you can always give them a call in the unlikely event that you have trouble setting up the system. —Francesca Nicasio, retail blogger, Vend

Myth #3: All rates are conveniently the same.

Thanks to the marketing of big players like Square and PayPal — which are not actually credit card processors, but aggregators — rates can vary widely and significantly. For instance, consider that the average debit rate is 1.35 percent. Square's is 2.75 percent and PayPal Here's is 2.7 percent, so customers will have to pay an additional 1.41 percent and 1.35 percent, respectively, using these two services. Some cards also get charged well over 4 percent, such as foreign rewards cards. These companies profit & mobile customers lose. Always read the fine print. — Evan Chacker, co-founder, SwipeZilla.

Myth #4: Credit card information is stored on my mobile device after a transaction.

Good mobile developers do not store any critical information on the device. That information should only be transferred through an encrypted, secure handshake between the application and the processor. No information should be stored or left hanging around following the transaction. — Matt Sebek, director of mobility, Asynchrony

Myth #5: It raises the risk of fraud.

Fraud's always a concern. However, since data isn't stored on the device — for Square and others, the data is stored on their servers — the risk is lessened. For example, there's no need for you to fear one of your employees walking out with your tablet and downloading all of your customers' info from the tablet. There's also no heightened fraud risk for data loss if a tablet or mobile device is ever sold. — Matt Schulz, senior industry analyst,

Myth #6: Wireless devices are unreliable.

Reliability is very often brought up as I think many businesses are wary of fully wireless setups. I think this is partly justified, but very easily mitigated, for example with a separate Wi-Fi network solely for point of sale and payments. With the right device, network equipment, software and card processor, reliability shouldn't be an issue. — Christophe Delacroix, managing director, Bluebird Global

Myth #7: Mobile processing apps are error-free.

Data corruption glitches do happen on wireless mobile devices. A merchant using mobile credit card processing apps needs to be more diligent to review their mobile processing transactions. Mobile technology is fantastic when it works.— Stephen Lesavich, Ph.D., J.D., co-author, The Plastic Effect: How Urban Legends Influence the Use and Misuse of Credit Cards (Coconut Avenue Inc., 2012)

Myth #8: "If we build it, they will come."

Many wallet providers believe that if you simply build a new mobile payment method into the phones, consumers will adopt it as their new wallet.   This includes proponents of NFC technology, QR codes, Bluetooth and other technologies, but given very few merchants have the POS systems to accept these new types of technologies, consumers have not adopted. Currently, only 6.6 percent of merchants can accept NFC, and even less for QR codes or BLE technology, hence the extremely slow adoption rate.  Simply put, the new solutions are NOT convenient, and do not replace consumers' existing wallets, not even close. — Will Graylin, CEO, LoopPay, Inc.

Myth #9: Mobile wallets are about to happen.

They aren't about to happen, especially in developed markets like the U.S.

It took 60 years to put in the banking infrastructure we have today and it will take years for mobile wallets to achieve critical mass here. — Harold Montgomery, CEO, Calpian Commerce

Myth #10: The biggest business opportunity in the mobile payments space is in developed markets

While most investments and activity in the Mobile Point of Sale space take place today in developed markets (North America and Western Europe), the largest opportunity is actually in emerging markets where most merchants are informal and by definition can't get a merchant account to accept card payments. Credit and debit card penetration is higher in developed markets, but informal merchants account for the majority of payments volume in emerging markets and all those transactions are conducted in cash today. — Alberto Jimenez, director of mobile payments, IBM MobileFirst

Image Credit: Many of the things you hear about mobile credit card processing are a work of fiction. / Credit: True or false image via Shutterstock