Accepting Credit Cards with your Smartphone

The advent of smartphones is one of the most exciting and life-changing technological advances of the last decade. With them, we can make phone calls, send messages, check emails, browse the internet and take photographs all with the same small device. They’re truly a wonder.

Now, thanks to innovative applications like GoPayment and Square, smartphones can do even more: they can accept credit card payments. With just the swipe of a card and a few typed-in numbers, you can have funds transferred from the credit card of a client, customer or friend right into your bank account.

Mobile payment processing is a great option for small businesses, companies on the go, or even individuals who occasionally accept payments from friends and family. It’s quick, easy and, best of all, affordable, especially in comparison to typical credit card processing merchants.


Smartphone Processing Setup

Square and GoPayment are the industry’s biggest mobile processing applications. To use them, you simply sign up for an account at the company’s respective website. Registration for both is free. After you’ve been approved for an account (Square requires a credit check first), the company will send you a small device, called a dongle, via snail mail. This is the device that you will use to swipe credit cards with.

The next step is to connect your GoPayment or Square account with your or your business’s bank account. This will allow the application to transfer funds directly to you. Now, you will need to download the service’s corresponding app onto your smartphone. The app is where you will type in transaction amounts and manually key in card numbers when a card is not present (like on an over-the-phone order.)

Finally, insert the dongle into your smartphone’s headphone jack, and you are ready to start accepting credit cards. Simply swipe the card through the dongle, type the transaction amount into the GoPayment or Square app, and voila! The transaction will be processed digitally, and you’ll see the funds appear in your bank account typically within 24 to 48 hours.

Compared to typical card processing merchants, mobile processing is much more affordable. While a typical merchant will charge monthly fees and require a long-term contract, mobile services do neither. GoPayment and Square charge on a per-transaction basis, and they require no time-commitments or contracts.


Processing Costs

For a swiped card, Square charges 2.75 percent of each transaction; for a keyed-in one, it charges 3.5 percent of the transaction, plus a .15 cent fee. GoPayment charges 2.7 percent fee for a swiped card, and 3.7 percent for a keyed-in card. They also offer a second option: for a $12.95 monthly subscription fee, you can accept cards at a rate of 1.7 percent for swiped cards and 2.7 percent for keyed-in ones. This system may be a good option for businesses doing a large amount of mobile sales each month.

Using mobile payment processing can save a small business hundreds or thousands of dollars a year in fees and transaction charges. For individuals, it offers a great option for accepting personal payments; even splitting the dinner bill becomes easier with mobile payment processing.


Eric Stauffer is a mobile payments expert as well as a payment-processing watchdog. His organization,, reviews payment processing companies and helps business owners negotiate proper contracts.