How to Use Your Smartphone for Mobile Payments with Dwolla and GoPayment

The topic of 2012 that has been buzzing in the payment industry is the growing use of mobile payments using a smartphone. Technology buffs everywhere have been the first to adopt this new payment method and it has been quickly expanding into the normal populace in the last 12 months. From everything to credit card acceptance to store-specific apps, the smartphone is starting to make a run at the traditional payment industry.

Accepting Credit Card Payments

One of the first to break down the barrier in the mobile payment sector was a company called Square. Started by Jack Dorsey, the co-founder of Twitter, Square allows an individual or business to accept a credit card from someone else directly on his or her phone by way of a small device that plugs into the headphone jack. By using the attachment, the credit card processor can give a more competitive rate vs. a card that is manually typed in.

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This technology was originally thought to be great for peer-to-peer money transferring, but the real benefactors quickly became small businesses that could not afford to accept credit cards in the past. Since Square utilizes a flat rate fee structure with no monthly fees or contracts, the small business owner that occasionally needs to accept a credit card finally had a method to do so.

Intuit, the makers of Quicken, quickly followed suit and launched GoPayment, a direct competitor of Square. They were able to leverage their already large asset pool to provide a better reader as well as better customer support, so the battle between the two for market share has really been heating up in the recent months.

Company Specific Apps for Smartphones

Starbucks made headlines recently when they rolled out a new app for Android and iPhones which allowed customers to load their gift cards into their account, and use the onboard app the make a purchase. When a customer pays for their order, they can pull up their prefunded account on their device and show the cashier the phone screen. The cashier can then scan the unique barcode on the screen and the prefunded account is debited the purchase amount.

Other companies have started to follow suit and third party companies have started popping up to create additional features for these apps. Specifically rewards programs that are more engaging with their customers and allow for businesses to track their customer buying habits.

Peer-to-Peer Money Transfers

A company started in 2008 called Dwolla has recently made big strides in the peer- to-peer money transferring industry. Though their technology is not limited to individuals, their true competitive advantage is in the ability for people to transfer each other cash with very limited fees involved. Dwolla created their own payment network, similar to how credit card companies do, and allow for money to be transferred at a nominal fee compared to the typical payment industry.

Businesses can also accept Dwolla payments and the smartphone app helps to facilitate the process. The app includes a proximity map that helps consumers find businesses in the area which accept Dwolla payments, and once a transaction is ready to take place, a consumer can pay for a bill with a few simple screen touches.

Guest Post by:  Eric Stauffer

Eric Stauffer is a mobile payments industry expert who maintains reviews for companies like Dwolla and GoPayment. His organization helps business owners find mobile payment solutions that best fit their needs.
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