Mobile POS Systems More Popular WIth SMBs

It’s not so unusual now to find local merchants and service providers using an iPad or other device to swipe your credit card when paying.
 
Some 40% of small and medium-sized businesses are now using mobile point-of-sale systems that use a card reader attached to a tablet or smartphone to accept customer payments. That’s among the key findings from Local Commerce Monitor, BIA/Kelsey’s ongoing survey tracking SMBs' use of media and advertising.
 
The annual study overall showed that SMBs are increasingly embracing mobile and social media as tools to help promote and run their businesses. The role of mobile in particular goes beyond media and advertising to operations with the rise of low-cost mobile POS systems that turn handheld devices into cash registers.
 
Mobile payments startup Square helped jumpstart adoption of the technology three years ago with the rollout of its small attachment for iOS and Android devices for swiping of credit cards. But the rival PayPal Here system from eBay unit PayPal has since become the most widely used mobile payments service among SMBs by far, according to the BIA/Kelsey survey.
 
While consumers may associate mobile registers mostly with coffee shops and small retailers, the research firms says the professional services sector is really where the trend is taking off. “A wide variety of services are doing this, everybody from the blue collar guy who picks up recycling to your personal trainer to your accountant,” said Steve Marshall, director of research for BIA/Kelsey.
 
The 40% of SMBs using mobile POS systems tied to smartphones and tablets overall is up from the 28% a year ago who said they used cell phones for handling payments. That increase may seem especially surprising, since small businesses are often reluctant to take on the expense or complexity of adding new digital or other technology.
 
“The key is they’re not thinking of this as digital,” said Marshall. “They’re not using mobile platforms because they’re digital -- they’re using them because they’re convenient."
 
Beyond the simplified hardware, a big part of the appeal of the mobile POS systems is that they also aim to undercut the hefty fees incurred with traditional terminals. Square, for instance, typically charges 2.75% of the purchase price on transactions, while PayPal charges 2.7%.
 
SMBs are also investing more in mobile advertising. About a third (32%) of businesses using some form of mobile advertising compared to 28% a year in 2012, “and almost zero a few years ago,” according to Marshall. Text messaging is the most popular format among SMBs, followed by enhanced listings (in local directories like YP.com and Yelp), and mobile search ads.
 
eMarketer has forecast U.S. mobile advertising overall this year will grow 75% to $7.65 million.
 
When it comes to social media, nearly three-quarters (72%) of SMBs are using social platforms to promote their businesses, with half (52%) having a Facebook page and a quarter on Google+ Local. While the share of businesses with a social media presence is roughly flat with last year, Marshall said usage has gotten deeper.
 
“They’re using it more intensely, spending more money on it, and placing a higher priority on it,” he said. Two-thirds of businesses described themselves as “extremely engaged” or “very engaged” with customers on social media, regularly blogging or tweeting, and updating their Facebook page. But can SMBs be trusted to rate their own performance?
 
In that vein, Facebook highlighted in its latest earnings call that local businesses helped propel its 61% ad revenue growth in the second quarter. About 18 million local businesses have Facebook pages.
 
BIA/Kelsey’s Local Commerce Monitor surveys 600 U.S. SMBs with 100 or fewer employees on their use of 35 different media categories and subcategories. The sample also spans two broad segments of businesses -- those that spend $3,000 or less in advertising and promotions a year, and those that spend over $30,000.
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