Jamie Herzlich Newsday columnist Jamie Herzlich

Herzlich writes the Small Business column in Newsday.

At Sip This in Valley Stream, customers don't have to hand their credit or debit card over to the cashier if they don't want to.

They can simply wave their mobile phone in front of a stationary scanner at the counter and make their payment in a matter of seconds while earning loyalty rewards toward future purchases.

"It's super-quick," says customer Maria Hansell, 29, of Valley Stream, who along with her husband, Sean, downloaded an app called LevelUp, which securely links their credit card to a QR code and enables their phones to make the payments.

LevelUp is just one of the many options now available in mobile payment technology.

The number of mobile payment users in the United States is estimated to grow from 32.7 million this year to 90.6 million in 2016, according to Stamford, Conn.-based Gartner Inc., a technology research firm. And businesses like Sip This are taking advantage of it, for convenience and cost savings.

For instance, with LevelUp, a merchant doesn't pay a traditional credit card processing fee but only pays if a customer redeems a loyalty reward tied to the app (35 cents for every dollar of credit redeemed), says Sip This co-owner David Sabatino, who estimates saving anywhere from 50 to 75 cents in processing fees per transaction. He also pays a $25 monthly equipment fee.

Your phone or mine?

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There's an assortment of competitors in the mobile transaction marketplace and various ways for merchants to accept mobile payments, explains Eugene Signorini, vice president of mobile insights for Wellesley, Mass.-based Mobiquity, which designs and builds mobile solutions and apps.

Besides reading a bar code or QR code off a customer's mobile phone, other apps allow merchants to turn their mobile device into a credit card processor via a card reader attachment like those offered by Square, Intuit and Apriva.

"The attachments are the most popular," Signorini says. "It's literally plug and play."

As with most mobile payment technologies, much of the benefit lies in the rich analytics the apps provide, including transaction history, he says.

The card readers, however, typically carry transaction fees, he notes. For instance, Square charges either 2.75 percent per swipe or a flat $275 a month.


Tom Samodolski, owner of MyMobile Munchies, says it's still less than what he paid with a traditional wireless credit card processing machine in monthly equipment rental fees, statement fees and other charges. Samodolski, who uses the Square card reader at his two coffee trucks in Farmingdale, estimates saving about $60 a month in fees since he started using the mobile technology about a year ago.

"Customers are pretty comfortable with it," he says.

Do your homework

Users looking to capitalize on the payment technology should do their homework when considering options, ensuring they're working with a secure vendor, advises Bill Ramsey, vice president and general manager for mobile payments for Apriva, a Scottsdale, Ariz.- based provider of mobile commerce technologies.

Ask what measures they use to keep data secure, including if they adhere to Payment Card Industry compliance standards and if the mobile application encrypts data at the time of swipe rather than storing it on the phone, says Ramsey.

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With AprivaPay, a mobile payment processing application offered by Apriva, customer card data is encrypted as soon as the card is swiped and isn't stored on the device.

Not everyone will be comfortable utilizing mobile payments, but greater acceptance will likely come with education and greater usage.

"Mobility is becoming central to the consumer's life," Ramsey says.

Fast fact

Mobile payment transactions worldwide will surpass $171.5 billion in 2012, up from $105.9 billion last year.

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Source: Gartner Inc.