While experts aren't exactly sure where technology will lead consumers when it comes to credit card transactions, it seems mobile devices will be involved. Already, many small businesses are getting onboard with these payment options.
Currently, there are relatively few businesses of any size that are accepting mobile credit card transactions, but that number is growing rapidly, driven largely by interest from smaller merchants, according to a report from USA Today. Small businesses actually make up a significant portion of all retailers nationwide, and therefore adoption of these programs will be crucial to the future health of the various mobile payment platforms that currently exist or are in development.
A poll conducted by the National Retail Federation in February found that just 6 percent of all merchants nationwide used these payment platforms, but that within the following 12 to 18 months, the number was expected to balloon to as much as half, the report said. And while larger companies are interested in the various technologies, smaller ones are leading the way with adoption because of the low cost involved with some of these platforms.
"We're seeing a huge explosion in small business," Ebrahim Keshavarz, vice president of small business product management at AT&T, told the newspaper.
For instance, the mobile payment startup Square already has about 2 million customers because they allow businesses to sidestep the sizable startup costs that usually come with accepting credit cards, the report said. Traditional point of sale card readers themselves can cost anywhere from $1,000 to $3,000, and that doesn't include the fees businesses face for regular use. Square, meanwhile, charges a slightly higher transaction fee than most companies but makes readers available at low or no cost.
Another type of emerging technology is mobile wallets, which are now being pursued heavily by industry giants including those in the tech, cellphone service and credit card payment processing fields, the report said. That includes Google Wallet, which has been available for several months and recently expanded to include cards from more issuers. Meanwhile, Isis, a joint venture between the nation's three largest cellphone service providers, is set to begin testing later this month in Austin, Texas, and Salt Lake City. Both rely on near-field communications chips embedded in smartphones to complete credit card transactions using accounts preloaded onto the devices.
Data from the research group Gartner shows that last year, mobile payments accounted for a total value of $105.9 billion, but that number is expected to spike 62 percent to $171.5 billion, the report said. By 2016, the value could be as much as $617 billion.
Experts have typically contended that while technology capable of completing such transactions is currently sparse, the larger obstacle to widespread adoption was consumers' wariness of the security of these systems. However, it's typically believed that mobile card payments are far safer than traditional use because of the ways in which they exchange and handle data.