The consumer experience has changed rapidly in conjunction with technological advancements. The modern customer has not only more expectations, but also expects their experience to be streamlined. The consumer payment experience is no exception, with the majority of modern businesses offering a number of potential payments avenues.
Mobile payments are exploding in popularity, and it’s no surprise considering that the vast majority of Americans use text messaging. Text to Pay Payment Providers provide a means of paying for services or goods via text message, with customers receiving a text directing them to initiate payment via a website interface or through an additional text message.
What are the Benefits of a Pay by Text Solution?
Benefits for the Customers:
- SMS Payments are simple and fast.
- Once set up, the payment method is securely saved.
- Payment reminders can be sent via text.
- Customers won’t have to reveal sensitive information over the phone, on an unsecured line.
- The purchaser doesn’t need to have their own bank account.
Benefits for Businesses:
- Pay by text is as simple and quick for businesses to use/implement as it is for customers.
- The merchant can accept payments from any of the billions of mobile phones capable of texting worldwide.
- Improved customer satisfaction is a given.
- Merchants can receive payments from customers who don’t have a bank account or credit card, thus reaching customers that would have otherwise not been reached.
- Late payments are reduced, along with reduced data input mistakes/human error from manual processing.
The Problems With Mobile Payments
Mobile payments and card not present (CNP) payments in general leave businesses open to new types of fraud, and the businesses are liable for fraud, chargebacks, etc. Restaurants in particular are susceptible to CNP fraud, with fraudsters employing a number of tactics to deceive the business.
Here are the most common CNP Fraud Tactics For Restaurants to be wary of:
- Social Media Transfer Fraud: Fraudsters reach out to unsuspecting people via social media, asking for a money transfer in exchange for a restaurant credit worth more than the initial transfer.
- Electronic Gift Card Fraud: Fraudsters acquire stolen electronic gift card codes and purchase items to sell at a discount for cash. The business that sold the items ends up liable for the chargebacks.
- Account Takeover Fraud: Scammers gain access to an online account in hopes of utilizing a saved payment method or loyalty points associated with the account. Loyalty points fraud in particular can be hard to detect.
- Friendly fraud: In-app transactions present several additional scenarios for friendly fraud. One example is kids using a parent’s digital wallet to place a big order. Parents later find out and will dispute the order because they didn’t authorize it. This places the restaurant responsible for lost goods and operations to resolve the dispute, and potential chargeback fees.
Mobile/CNP payments are mostly a positive for both customers and businesses. There is a potential for increased sales and customer satisfaction, but along with that comes to potential for fraudulent activity. Businesses (restaurants in particular) must be sure to understand the risks associated with mobile payments, and take action to protect themselves.