Mobile payment methods: A complete guide for small businesses

If a customer wants to pay by phone and you’ve got no way to take it, the chances are they’ll go elsewhere. A LendingTree survey found that 37% of mobile wallet users have stopped shopping at a business that didn't accept digital payments.

Setting up your company to accept mobile payments is quick, straightforward, and great for boosting revenue. QuickBooks' cash flow management tools track every payment so you know exactly where your money is and where it came from. Below, we’ll explain the benefits, the different types of mobile payments, and how to get started.

What is a mobile payment?

A mobile payment is any electronic payment made or received through a smartphone, tablet, or wearable device instead of cash, a physical card swipe, or a check.

Both sides benefit. Your customers pay faster, and you accept payment without handling cash or waiting for checks to arrive.

How mobile payments work

Mobile payments use wireless signals, encryption, your customer’s device (like a smartwatch), and your device (like a reader or your smartphone) to complete transactions. The process is very fast and, for you, you never have to handle actual card numbers so the risk of fraud is lower.

A typical tap-to-pay mobile payments processing flow looks like:

1. Customer taps their phone or wearable against your card reader

2. They confirm with a fingerprint or Face ID

3. Their payment app creates an encrypted token and sends it to your reader

4. The card network (like Visa or Mastercard) checks and approves the transaction

5. You get confirmation of acceptance, and your customer gets a receipt

6. Funds arrive in your bank account, sometimes the same day or within one to two business days

The technology used depends on the payment method, but the outcome is the same. Mobile payments rely on one or more of the following technologies to work:

What are the types of mobile payments?

There are six mobile payment options for small businesses. They work differently, but there can be an overlap between them. For example, digital wallets like Apple Pay use the same NFC tap technology as contactless cards, so they sound like the same type of payment, but each one works differently.

Here's what sets them apart:

1. Digital wallets

A digital wallet is an app on your customer's phone that stores their card details so they don't need to carry a physical card. They can add multiple cards to a digital wallet, from their everyday debit card to their business credit card.

To pay, they just hold their phone near your card reader and confirm with a fingerprint or Face ID. The process takes seconds. The most common types of digital wallets are Apple Pay, Google Pay, and Samsung Pay.

At your end, you'll need a way to accept NFC payments. That could be:

• A built-in feature on your POS terminal
• A small standalone card reader that connects to your phone
• Your own NFC-enabled smartphone with an app like QuickBooks GoPayment

Digital wallets are a great fit for any business taking in-person payments, from retail to food service, because the faster you service the line, the more customers you can take care of.

2. Contactless (tap-to-pay) payments

Contactless payments use the same NFC technology as digital wallets. Your customer taps or holds their physical card or a wearable, like a smartwatch, close to the payment reader. For smaller purchases, there’s usually no need to swipe or insert a card or enter a PIN code.

Transactions go through in seconds, meaning customers get served faster. And because nobody has to touch a keypad or hand anything over, it’s more hygienic.

You don't need any extra equipment if you're already taking digital wallet payments, as contactless cards and wearables work on the same reader.

3. QR code payments

Your customer scans a QR code with their phone camera and then pays through a linked app or payment page, so you don't need a card reader. You could use a static QR code displayed at your checkout, or generate a dynamic one for each transaction to use on receipts or invoices.

QR code payments are popular with restaurants, pop-ups, and service businesses sending invoices. Setup costs are minimal, and you can take payment or invoice on the go, so you're not tied to a register or a fixed location to get paid.

4. Peer-to-peer (P2P) payments

Peer-to-peer payments are direct money transfers between two people, or between a person and a business, using apps like Venmo, Cash App, and Zelle. Your customer just opens the app and sends the money straight to your account, so there’s no need for a card reader or terminal.

They’re simple, but there are trade-offs. P2P payments don't usually show itemized details, so you may need to spend time figuring out which payment relates to which order. Some apps don’t connect natively to accounting software like QuickBooks Online, meaning you have to type in transactions by hand.

That’s OK if you’re taking a few P2P payments a week, but if you’re taking dozens, you’ll spend more time on admin, and there’s a risk that you may miss some orders. If a customer reverses a payment after you've already shipped the goods, that can become a bad debt expense.

For freelancers, small service providers, and anyone needing to take occasional payments, P2P payments can be handy because many of your clients may already have the app on their phone.

5. In-app payments

In-app payments let your customer browse, choose, and pay all in one place without being sent to a separate screen. DoorDash and Uber Eats are well-known examples of in-app payment platforms. Many small businesses start on apps like these, as they handle both the advertising and payment processing for them.

Building your own app or booking platform cuts out the middleman, so you keep more of each sale and own the customer relationship directly.

Your customer then does everything inside your app from start to finish. You can offer extras like saved cards for quicker checkouts and recurring payments for regulars.

The setup is more involved, and you may need to invest in a developer to build your in-app platform. But over time, the savings on third-party fees and the repeat business from a better customer experience pay for themselves.

6. Mobile point-of-sale systems (mPOS)

An mPOS (mobile point-of-sale system) is similar to a traditional point-of-sale system in that it consists of software and portable hardware. You can install the software onto an existing tablet or phone, or it can be a part of a specialized package with proprietary hardware. With an mPOS, a business can accept payments in multiple places.

Several companies offer mPOS setups for a variety of business types. Using Tap to Pay on iPhone or the card reader through the QuickBooks mobile app, you can take payments nearly anywhere from customers with credit cards and popular mobile wallets like Apple Pay.

To start accepting payments with a mobile point-of-sale system, you’ll need to find a payment service provider that offers them and then integrate them with your existing systems.

How to accept mobile payments for your business

Once you know which payment types you want to offer customers, you need to set your business up to accept digital payments. Here's how to do it:

1. Choose a payment provider

Search for a provider that lets you accept credit card payments alongside tap, QR, and digital wallets. Then, start creating a shortlist of those that integrate with your accounting software and provide the hardware options you require, like a countertop terminal, a portable reader, or an app for your phone.

Fees vary by provider and by how you take the payment. For example, this is the fee structure offered by QuickBooks Payments:

Typical mobile payment solution fees follow one of the following two models:

• A percentage of each transaction (like QuickBooks Online)
• A flat rate plus a small per-transaction fee (for example, 2.6% + $0.10)

Some providers also charge a monthly subscription on top.

Before committing to one provider, compare what you'd actually pay based on your typical transaction size and volume with each option.

2. Set up your payment tools (app, reader, POS)

To set up with most providers, you download their app, order or connect a card reader, or configure your POS terminal, if you have one. Many card readers connect via Bluetooth and pair with your phone in minutes.

For the fastest setup, services like the QuickBooks GoPayment app let you swipe payments straight from your phone with a small portable reader. You may not even need a reader if your phone has NFC built in.

3. Connect your business bank account

Link a business bank account to your payment provider so they know where to send your money.

Your provider will need to verify the account first, usually one of two ways:

• Micro-deposits: two small test payments show up in your account whose amounts you then confirm
• Instant verification: enter your online banking details into a secure window during setup and your account is confirmed immediately

One thing to check with your provider is their settlement window. That’s how long it takes for you to receive funds after taking the customer’s payment. Many offer one-to two-day settlement and some offer instantaneous settlement for an additional fee.

Knowing when you receive your money helps you manage your cash flow, especially if you have supplier invoices or payroll due soon.

4. Enable payment options for customers

When you’ve set up your account, decide which payments you’re going to accept. Most providers let you configure tap, chip, swipe, and QR payments through the app or your POS settings. The more options you offer, the more likely it is that your customer pays there and then.

For remote or online payments, set up payment links or invoices you can send by email or text. These let customers pay from wherever they are, without having to visit you in person or call you to provide their card details. You can also offer installment payments for bigger jobs, so customers aren't put off by a large one-off cost.

If you’re taking face-to-face payments, like in a shop, a food truck, or a market stall, consider displaying a QR code, enabling tipping, or adding your logo to digital receipts to improve the customer experience.

5. Sync payments with your accounting software

By syncing your payment provider with your accounting software, you eliminate manual entry, reduce the risk of errors, and keep your books accurate and up-to-date. Accounting software, like QuickBooks Online, records every transaction automatically.

QuickBooks Online automated invoicing software notifies you when customers view your invoice and when they pay. This gives you a live picture of your cash flow and means you're more prepared for tax season, with every payment recorded, categorized, and in one place.

6. Test your setup and start accepting payments

Before you take your first real payment, run a test transaction. Check that the payment goes through, the customer receives a receipt, and the transaction appears in your dashboard.

It only takes a minute, and it's better to catch a problem now than when someone's standing at the counter waiting to pay.

What are the benefits of mobile payments for small businesses?

The main benefits of accepting mobile payments for your business are:

• Faster checkout: Serve more customers so your line moves faster during busy periods
• Fewer missed sales: Customers can pay with their devices, even if they’ve left their cards and cash at home
• Faster access to your money: Mobile payments clear quickly, which can help the 45% of small businesses that report cash flow problems, according to the QuickBooks Small Business Insights survey
• Less cash to handle: This lowers the risk of theft, reduces manual work, and means fewer bank runs
• Accurate financial records: With every payment synced and logged to your accounts receivable, you’re up-to-date and more ready for the tax season
• Customer satisfaction: People get frustrated when they see something they want, have the money to buy it, but you can’t take payment

Accepting mobile payments saves you time, protects your cash flow, and reduces friction for your customers at the point of sale, making them some of the most practical small business payment methods you can offer.

Choose the best payment setup for your business

If customers can’t buy from you using the payment method they prefer, they may move their business to one that can. Setting up mobile payments is quick and straightforward, and you see the return in faster checkouts, higher sales, and better cash flow almost immediately.

Accept tap, chip, and invoice payments through QuickBooks Online Payments, with every transaction automatically syncing to your books in real-time for more accurate bookkeeping.

With the QuickBooks mobile app, you can accept mobile payments from Apple Pay, PayPal, Venmo, credit card, and ACH transfers. You can manage many of your business’s financials directly from the app, and it integrates with other QuickBooks products for a streamlined system for managing your money.