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Tap-to-phone will change the payments game for small retailers and merchants

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Kasper Enggaard Krog, CEO at mobile payment and business technology firm, Vibrant, explains why micro businesses should explore new payment options.

As we enter a new, hopefully calmer, year, small businesses, retailers and merchants should be looking towards a new payment method. It’s time to tap into softPOS.

Otherwise known as tap-to-phone, the notion of receiving contactless payments to our most convenient and accessible devices has, bizarrely, been repelled until recently.

Despite the method’s inherent ability to make transactions more seamless, frictionless and contactless, Europe has only recently started moulding the market to its introduction.

And in the UK, progress hasn’t even reached that stage.

Regulations in the country are such that once a contactless limit is reached, a PIN needs to be entered. And the UK still isn’t keen on the idea of phones being used as a primary portal to securely authorise payments in that way.

This is a status quo that smaller retailers and merchants should be lobbying against, in the same way that Vibrant – a leading innovator in this space – is already doing.

Keeping contact has damaged small businesses

Without making this transition, those businesses that stand to benefit from tap-to-phone will be forced to persist with a level of contactless innovation that has largely stalled, and that is less fit for purpose than ever before.

Even prior to the pandemic, the transaction phase of the customer experience was less than suitable for market traders, car washers, hairdressers and numerous other microbusinesses that contribute so greatly to communities and economies.

As COVID then took hold, investments into card readers became necessary evils for this demographic, but came with fixed contracts and unfavourable fee structures; resulted in slow settlements; and incurred a lot of additional admin and ongoing expenditures.

Meanwhile, for the consumer, this ‘card reader at best’ situation has also meant much closer contact through either cash or PIN-based transactions, at a time when contact really wasn’t ideal.

Digitised consumers vs lagging merchants

So, why is tap-to-phone the answer?

The above scenario may sound a little bleak, but the retail market in general is actually sitting quite pretty. Contactless payments as a general preference are here to stay, and people are looking local again.

Shoppers have reconnected with their communities and nearby vendors, and are willing to maintain this preference moving forward. It would be tragic for the most mobile and convenient businesses among this demographic to not capitalise on the trend fully, because the payment options they come with conflict with that expectation of ‘convenience’.

Tap-to-phone is therefore a gamechanger. And a timely one at that.

Solutions such as Vibrant’s can be set up and mobilised in less than 24 hours, and ensure ongoing immediacy from that point on. Transactions are documented and visible straight away, the money reaches the merchant’s account within 72 hours, and there is no binding period or monthly expenses.

From a financial perspective, there is only a 1.39% transactional fee on all cards, compared to wider card payment norms which are rising nearer to 3% in a lot of cases. This is before you consider authorisation fees and merchant service charges, that are all eliminated through a softPOS app.

Then there’s the consumer.

Even from an image perspective, it feels likes something of a mismatch when a shopper is more technologically advanced than the provider they’re buying a service from. While customers offer up their smartphone or even their watch, they in turn are handed an antiquated device (that we’ve all seen malfunction or struggle to connect).

Making the transaction process more seamless and, frankly, equal, adds a vital layer of personability for a segment of industry that thrives on that human ‘touch’.

Tapping into a new era

The simplicity and speed in which merchants can initiate and mobilise on the payment front is also key. For new sole traders, startup vendors or freelance operators, taking this strain out of one of the more pressurised considerations is a huge benefit.

Those who get in early with this innovation will also be at an advantage. With a solution that makes so much sense, it’s likely that consumers will have that positive feeling of ‘why haven’t we always been able to pay in this way?’… A feeling that any microbusiness will want to be on the receiving end of, before it inevitably becomes an entrenched norm.

We say ‘inevitability’ because that’s what it is. And consumers should be preparing for the transition. And microbusinesses and smaller merchants should be ramping up the pressure on a relaxing of regulations around authorisation limits.

This is not a market fad that could go either way. Vibrant is already working with VISA to get European businesses up and running through the former’s app. It is an app that not only facilitates the receipt of payments but also serves as a management, inventory and cost-setting tool.

In essence, these early adopters will soon be able to run their small operations from their most convenient and accessible possession.

The UK simply must follow suit and tap into this new era of payments, for the benefit of our communities’ most loved businesses.

Global Banking & Finance Review


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