Our payment processing is evolving to match the fast-fire character of contemporary companies. Whether your business is a small local store or service-based, your cash flow, customer experience, and general efficiency may be much influenced by the payment option you use.
Nowadays, the business sector is rather divided on the relative benefits of mobile payment systems and ACH (Automated Clearing House). Though each has merits in their own right, which one will benefit your business most? I will therefore outline the differences between the two solutions and identify their benefits and probable drawbacks so that you may choose for your business with knowledge.
What Are Mobile Payments?
“Mobile payment” is the phrase used to exactly define a method of financial transaction made using a mobile device. One might employ SMS-based payments or apps. Services like Apple Pay, Google Wallet, and Xipster’s own mobile payment solution make it easy for customers to pay on-the-go with just a tap or a text.
The explosive rise in popularity of these payment systems may be attributed to the spread of contactless transactions and the direction toward a digital-first culture. Since they are quick, convenient, and handy, businesses usually see mobile payments as the future.
Benefits of Mobile Payments
- Efficiency and Speed: Mobile payments happen lightning quickly. Consumers may make a payment in a few seconds instead of waiting for a standard card swipe or inputting lengthy account information.
- Customers may pay anywhere, at any time—from your shop to a service site or even from home by SMS or online.
- Mobile payment systems often use tokenization and encryption to guarantee that private financial data remains safe. Moreover, certain technologies make it more difficult to access in a fraudulent way as they need biometric verification—that is, a fingerprint.
- As a small company owner myself, I have personally experienced how SMS payments may revolutionize things. Using SMS payments keeps the procedure easy for your clients while increasing engagement and cash flow.
Downsides of Mobile Payments
- Certain mobile payment companies levy transaction fees, which over time may be significant. Before committing to a certain service, it’s wise to review the small print.
- Mobile payments depend on consumers carrying a smartphone with active internet connection. Although this is typical, it is important to keep in mind that not every consumer would want or be able to make use of mobile payment methods.
What Is ACH?
Through automated clearing house (ACH) transactions—that is, electronic money flow between financial institutions—the ACH network enables ACH payments to find use in direct deposits, bill payments, and other regular activities. Unlike mobile payments that need a smartphone or app, consumers only need to know their bank account and routing information to execute an ACH transfer.
Benefits of ACH
- Generally speaking, ACH transfers are less costly than mobile payments, which attracts businesses that handle more transactions.
- Companies that provide subscription-based services or recurring billing usually go first to ACH. This is a consistent approach to ensure quick payment processing without daily human input of payment data.
- Security: The government closely regulates and finds considerable security in ACH payments. Financial institutions back the ACH network promises of steady money flow.
Downsides of ACH
- ACH payments may settle several days, which may impact cash flow for businesses reliant on quick payments. Mobile payments by comparison almost happen right away.
- For one-time purchases or ad hoc purchases, ACH is not as flexible as mobile payments even if it is great for monthly payments.
When Would You Want to Use Mobile Payments Rather Than ACH?
To guide your payment choice, review your customer preferences and company strategy. Today, we may split it:
When should one use mobile payments?
- Mobile payments may simplify your transactions and provide a more contemporary, customer-friendly experience whether you operate a shop, café, or another kind of retail business.
- Offering on-demand payment choices via SMS or apps, service-based businesses such as hair salons, vehicle repair shops, and contractors would gain from mobile payments.
- Online Sales: Should you own an e-commerce store, mobile payments provide a fast and simple checkout solution.
When should one use ACH?
- ACH is a quick approach to automate recurring payments or subscription models your company uses.
- Larger Transactions: ACH payments are usually perfect for business-to—business deals when exorbitant costs would otherwise eat into your earnings.
- Customer Convenience: ACH might be the solution if your clients mostly belong to the business sector or choose conventional banking practices.
The Mixed Approach: Can You Use Both?
The good news is that choosing only one is not absolutely required. These days, businesses that take ACH as well as mobile payments are not rare. For subscriptions and other regular payments, use automated clearing house (ACH); for one-time purchases or transactions made while on the road, use mobile payments.
Since platforms like Xipster make it simple to include many methods into your business, consumers might choose the payment method most handy for them.
With this useful guide, find out what your business needs from an online payment system.
A Quick Look at Payment Trends
Studies show that more people are using mobile payments. According to Fortune Business Insights, the global Mobile Payment Market Size is projected to hit USD 11.83 Trillion in 2028, at CAGR of 29.1% during forecast period [2021-2028].
Particularly as more businesses begin to provide mobile payment options, this explosive increase indicates that consumers are ready to utilize them.
For 79% of consumers, the presence of a basic mobile payment option raises the possibility of a purchase. Given the trends, it is essential to provide mobile payment options if one wants to stay competitive.
The Takeaway: Mobile Payments or ACH?
While deciding between mobile payments and ACH, take into account the special character of your business, customer preferences, and financial circumstances. Thanks to their simplicity, speed, and security, mobile payments are ideal for companies that give customer experience and flexibility first priority. On the other hand, businesses managing significant transactions or regular payments should use ACH.
If you can’t determine which one would be best for the payment requirements of your business, try both of them. By integrating mobile payments into your process using Xipster’s mobile payment system, you can provide your customers a range of payment options fit for their needs.
Whether you use a mobile app or ACH payments, the goal is to simplify your business procedures and give your consumers first priority.
If you look at both solutions, your business will be more ready to meet the payment preferences of a varied audience. If you’re ready to take the next step, don’t forget to check out 5 Big Reasons Your Company Should Switch to Mobile Payments Today and see how switching to mobile payments could benefit your business.