It is now easier than ever to accept contactless payment from Visa, Mastercard, Discover and even American Express. Some new payment options, however, have emerged that your business may want to capitalize on. Not counting services like Apple Pay, Google Pay, and Samsung Pay which all work as NFC-enabled versions of customers’ existing credit cards, there are several new and re-emerging payment options that businesses may be missing out on. Services like Venmo and its parent company PayPal are P2P (person to person), meaning that customers can transfer money between each other, and more importantly, hold a balance similar to a bank account. More and more companies have also been accepting payment via SMS, leading several small businesses to wonder if they, too, should adopt the young technology.
PayPal, and more recently Venmo, have become massive money-moving tools and recently announced that their users can pay with their account balances via contactless payment. Accepting contactless payment beyond the big four card companies can be a big win for your small business but there are some additional steps and caveats you should know about adopting QR code contactless payment before you sign the dotted line. This article will explain the key details of up-and-coming payment methods including Venmo for business, PayPal contactless, and pay by SMS via Everyware so business owners can make a more informed decision as to whether or not these payment options will work for their business.
Paying by QR Code
While an exceedingly popular payment option in Japan, Taiwan, and South Korea, QR Codes are just taking off in the United States and Canada. Paying by SMS exploded in the countries it did largely because merchants took advantage of near-universally used messenger apps that doubled as virtual wallets. In recent years, two companies, which quickly merged into one company, have become the de facto kings of QR payment in the west; those being Venmo and PayPal.
QR Code payment functions through an intermediary app like Venmo or PayPal where merchants set the price on a tablet, terminal, or phone and have the customer scan the code with their phone. The customer will then be prompted to pay on their own device. PayPal and Venmo, however, do not operate equally and it is important to know the differences between the two apps’ rates and terms.
PayPal by QR Code
In order to take advantage of PayPal’s contactless QR checkout, merchants need a merchant PayPal QR code. Business owners can download their own QR code for free from this link. Once you have your unique QR code, either print out the code or set up a tablet at your point of sale that customers can scan when checking out.
Terms: PayPal offers rather competitive terms even compared to NFC-enabled contactless payment. Both guest and PayPal user transactions have a fixed fee for commercial transactions that is determined based on currency. The chart below lays out PayPal’s terms for USD.
|Rate||Fixed Fee (Per Transaction)|
|QR Code Transactions $10.00 USD and Below||2.40%||$0.05 USD|
|QR Code Transactions $10.01 USD and Above||1.90%||$0.10 USD|
Bottom Line: Adding PayPal contactless payment is a mostly harmless addition to your business that lacks an annual or monthly fee and offers competitive rates. One problem brick-and-mortar retailers may see is that customers must manually type the amount of money they are sending to merchants. Unlike NFC payment where the merchant inputs their price and customers scan their card, QR code payment via PayPal may cause slowdowns in long queues because of a need to double-check if customers have paid the proper amount. PayPal QR payment is likely a great choice for small businesses that are one-person operations like barbers or businesses in environments like outdoor markets. If you are a business with a brick-and-mortar facility, do your research to see if QR code payment may be more hassle than it is worth.
Venmo by QR Code
Venmo is actually owned by PayPal, but Venmo’s commercial transaction rates and payment options are slightly different from its parent company. To accept Venmo contactless payment at your business, you’ll need a free Venmo business profile. You can set up a Venmo business profile through this link. Once you have an account and have set up your QR code, if you’re interested in stepping up your Venmo presence at your point of sale, look into Venmo’s several QR kits with official QR code lanyards, tabletop displays, and stickers.
Small businesses that don’t have a dedicated point of sale can use their Venmo business profile as a virtual POS, great for contactless payment. Similar to personal Venmo accounts, merchants can set prices and charge customers as well as let customers initiate a payment. The Venmo QR code system allows merchants to manually select a price, show the customer their unique QR code, and have that price show up on the customer’s Venmo account. Once the charge is complete, the merchant will be immediately notified.
Terms: Even though PayPal owns Venmo, business profiles on Venmo have somewhat different transaction fees. Venmo’s rate is flat, unlike PayPal’s which splits its rate above and below $10 USD. Also, unlike PayPal which can use several international currencies, Venmo specifically deals in USD.
|Rate||Fixed Fee (Per Transaction)|
|Venmo QR Code Transaction||1.90%||$0.10 USD|
Bottom line: Accepting Venmo QR contactless transactions is functionally similar to accepting PayPal QR, but Venmo still has unique advantages over its parent company. Venmo sits squarely in between P2P payment mediator and social media. Venmo transactions are broadcast on the app like status updates on Facebook or Instagram. Accepting Venmo at small businesses is a great way to increase brand awareness and generate some free marketing.
While PayPal is most popular for online retailers and small businesses, Venmo truly puts the “person” into P2P as the app is commonly known for friends splitting bills and other social occasions. If your business is frequented by younger consumers or is too small to support a full-scale POS with the big four credit card providers, Venmo QR payment is likely a great way to make payment even easier for your customers.
Paying by SMS
Even though SMS predates even the QR code, using SMS for payment is still a relatively young option. While most SMS payment services offer a full suite of features including marketing and customer support options, today we will focus specifically on payment and whether implementing the system is worthwhile for your business.
Paying by SMS means that a merchant must send a message to a customer with an imbedded link that redirects them to a webpage where they can pay for a service. Many pay by SMS services also double as customer service platforms and can just as easily distribute refunds when necessary.
Everyware by SMS
Everyware is an all-in-one eCommerce tool with a payment system that functions more like invoicing than retail sales. Since payment is done via SMS it may be time-consuming to coordinate getting a customer’s phone number at a POS. If you run a business through Facebook, Twitter or websites that use Stripe for e-sales, Everyware is likely a dream tool. Even brick-and-mortar locations have begun adopting SMS payment parallel to traditional ordering by phone.
Terms: Compared to paying by QR code, paying by SMS has a slightly higher rate and fixed fee. This rate difference is likely due to the several other services that SMS payment tools include like message automation and marketing tools.
|Rate||Fixed Fee (Per Transaction)|
|Relay SMS Transaction||2.90%||$0.30 USD|
Bottom Line: A big hit to pay by SMS services like Everyware is that they have monthly or annual fees. Once again, this is because of the several services offered at once by companies like Everyware. Everyware does not disclose individual pricing deals on their websites and asks that interested merchants contact their sales team to set up a free trial.
Everyware is likely a useful tool for near-all ecommerce companies, but it is a harder sell for stores with a physical POS. SMS payment would likely be much more helpful in brick-and-mortar stores as an additional option for calling ahead or ordering early. As long as you can spare a staff member to quickly answer messages from customers the same way as you would treat a customer phone call, Everyware may be a helpful tool to increase sales.
The Future of Payment
The COVID-19 pandemic massively increased demand for alternative, contactless payment options like SMS and QR codes. Even as the pandemic wanes and customers are going back to their pre-2020 habits, these new payment systems have shown no sign of slowing down. Businesses that meaningfully adopt QR code or SMS payment systems into their business will likely find that it will only go to increase sales. If that comes in the form of customers who would text their order rather than call, or customers that share their visit to your business on their Venmo timeline, new payment systems are reflective of the world’s new consumers. Businesses that adapt first have the most to gain.