17/04/2012

By Nick Ogden, CEO Of CashFlows

It’s a difficult time for business owners, especially the entrepreneurs and SME owners. With the greatly publicised failures of the banks to reach their SME lending targets and the tail end of the worst financial crisis of a generation, it is an incredibly difficult economic landscape for small businesses.

This background of economic woes presents a number of challenges. It can seem like SMEs are constantly tackling a storm of payment problems, with cash flow, debt and fraud issues all ongoing concerns. Whether accepting payments from clients or customers, the range of payment-related issues facing SMEs may sometimes seem endless.

Whilst it is clear that SMEs face a payments minefield, it is also evident the emergence of mobile commerce is changing the payment landscape. In fact, the country’s SMEs are some of the best placed to benefit from this evolution.

Take the example of a large chain retailer; for them, implementing m-commerce payment solutions is a large and costly undertaking because of the investment in new PoS technology. In comparison, SMEs can introduce customer-friendly payment options quickly and easily, that could make a big difference to their business. Being able to move away from costly and inefficient paper-based payments, like cash and cheques.

M-commerce: the new frontier for payments

The rapid adoption of smartphones could be viewed as a challenge for SMEs. Yet there are a variety of ways that mobile commerce can support and improve a business and real changes and advances are happening in this space.

In order to fully engage with the customer and create a seamless experience, businesses are required to understand the scale of the m-commerce payment channel. Until recently, m-commerce has been viewed purely in terms of shopping online with your mobile phone. Yet this ignores the full potential of m-commerce and the mobilisation of money. Mobilising money requires a range of solutions to enable businesses to both accept payments on their mobile phone and from their customers’ phones.

Accepting payments on your mobile requires either a Chip and PIN device or authorisation from an e-wallet, like PayPal or VoicePay. The ability to convert a mobile phone into a portable payment terminal provides businesses with new ways to sell their products and services on the move. It has also enabled certain industries and trades to start accepting card payment where previously no such option existed, for example small businesses, like window cleaners or plumbers who are constantly on call to clients.

The contactless potential

One innovation in supporting mobile payments is the rise of near-field communication (NFC). NFC technology allows contactless payments to occur, where a user can swipe their mobile across a reader to pay for low value goods. An increasing number of mobile phone manufacturers and operators are beginning to include NFC technology into their phones as a standard feature. This enables the small percentage of businesses who take contactless payments to accept payments of up to £15.

The next step in m-commerce is in the placement of a mobile wallet onto the phone. Customers can top up their mobile wallet directly from their bank account or securely store their payment details on the phone, allowing them to make mobile purchases securely and with speed and ease.

The real power of m-commerce is in the enabling of customers to make instant purchases, not just from a physical shop but also from offline marketing material like TV ads, magazines, exhibitions and brochures through the use of QR Codes. QR codes act like barcodes and can be scanned into the phone to prompt the user to take an action, such as visit a website to view a product. This is just one illustration of the m-options available to businesses.

What’s app-ening here?

The m-commerce revolution also has the potential to dramatically change the way that businesses communicate with their customers. For example, SMEs can download mobile apps that allow them to accept card payments straight after completing a job, allowing them to check and manage their funds on the move. Rather than arduous process of waiting for a cheque to clear, payments can be taken instantly, with immediate visibility in the business account.

Alternatively, businesses can choose to commission the development of their own branded app. This may seem like a costly and complicated undertaking, but with a wide range of payment app-developers and APIs available, it doesn’t take long to get up and running. Furthermore, given that competition surrounding apps is heating up by the day, it should prove to be a worthy investment, and one that will ensure a business remains ahead of its competitors. Take the example of a decorating firm: a branded app would allow customers to log on, view any number of personal invoices, make a payment and view payments outstanding, all within the one app.

Payments: what’s on the horizon?

It is a time of economic difficulty across the nation and this is particularly true for small businesses. Yet small businesses do have the tools to ride out this wave of austerity and it is important that they recognise this. SMEs are typically more open to innovation than their more established counterparts, and this may well be their key to success; the rise of mobile is just one example.

Times are changing — make sure your business is changing with them.