How to Take Card Payments Via Your Mobile Phone: A Step-by-Step Guide

There are two main ways to take card payments via your mobile phone:

• A Tap to Pay on Phone app: a phone app that allows you to accept contactless payments
• A mobile card reader: a card reader that connects to a mobile EPOS app (m-POS) on your phone

Using a phone to take payments is a cheap way to accept card payments since it requires no (or minimal) hardware purchases. It’s a good option for on-the-go or casual sellers, such as market vendors, pop-up shop runners, or festival workers

We’ll explain how each method for taking payments via a mobile phone works, give you provider recommendations and suggest alternative ways to accept payments with minimal investment.

If you need help finding a provider that offers mobile payment solutions, use our free quote tool to get tailored quotes from our network of trusted merchant service providers.

Taking Payments With a Tap to Pay on Phone App

Tap to Pay on Phone apps work similarly to the Tap to Pay with Phone function on most mobile phones, except in reverse.

When it comes time for a customer to pay, they simply need to hold their card or phone (if they’re using a digital wallet) near the merchant’s phone and wait for the payment to go through. It usually only takes a few seconds, the same time it takes for a contactless payment to go through on a card machine.

However, since mobile phones don’t come equipped with chip readers, this method for taking payments can only be used for contactless payments.

How to accept payments using a Tap to Pay mobile app

Although the exact process for taking payments will vary depending on the app provider, here are the basic steps you need to take:

1. Choose a payment processing provider that offers Tap to Pay: Several providers offer a Tap to Pay app, however, some providers’ apps are only available on Android or iOS, so make sure you choose a provider whose app you can download on your existing mobile phone. For example, Square and SumUp offer apps for both Android and iOS, but Tide only offers an iOS app.
2. Open an account: Once you’ve chosen a provider, you need to open an account with then before you can start using their app. Since most providers that offer Tap to Pay apps are zero-contract and have clear, fixed card processing, this is a quick and easy process for most businesses.
3. Download and set up the app: Downloading the Tap to Pay app is a straightforward process since all you need to do is search for your provider’s app in your phone’s app store and click download. If you want to make sure you’ve got the right app, most providers also provide a link directly to it from their website. Once the app is downloaded, follow the steps to sign in and set up.
4. Enter the amount a customer needs to pay: Once you’re set-up with the app, all you need to do is enter the amount a customer needs to pay, and indicate that you’re using the Tap to Pay function (this last step is only necessary if the app can also be used to operate a mobile card reader).
5. Hold your phone near the customer’s card/phone: For the payment to go through, tell your customer to hold their card or phone (if they’re using a digital wallet) near your phone, as they would do for any contactless payment.
6. Wait for confirmation of payment: Make sure you wait for a confirmation that the payment has been accepted before you tell the customer to remove their card/phone.

Is Tap to Pay on Phone Safe?

Tap to Pay on Phone is generally safe since providers use the same encryption and tokenisation software on their Tap to Pay Apps as they do on their card machines.

However, since different providers offer different security features, is always best to check what security and fraud prevention they offer before signing up.

Make sure you choose a provider that is PCI-compliant, and check what fraud prevention measures they have in place. Common anti-fraud measures are 24/7 fraud monitoring and transaction scoring via specialised software. Another good indicator that the provider is safe and reliable is if they have an ISO 27001 certificate, which means they meet global standards for data security.

Taking Payments With a Mobile Card Reader

When taking payments with a mobile card reader, you’ll still be using an app on your phone to enter charge amounts and manage payments, however, you’ll be using the app along with a card reader that’s connected to your phone app via Bluetooth.

The key difference here is that the customers interact with the card reader instead of the merchant’s phone when making a payment, and, since card readers have chip readers, customers can make chip and pin payments as well as contactless ones.

How to accept payments using a mobile card reader and app

The first steps to using a mobile card reader are the same as when using a Tap to Pay on Phone app. You need to find a provider that offers a mobile card reader and app that’s compatible with your phone, sign up for an account, and download the app.

Once you’ve done that, here’s what else you need to do:

1. Order a mobile card reader from your provider: You’ll be able to order a mobile card reader from your chosen provider’s website and have it delivered to your desired address. Some providers have more than one type of card reader, so make sure you’ve chosen the mobile one. It’ll generally be the cheapest and offer a Bluetooth connection.
2. Connect your card reader to your mobile app: Make sure your card reader is charged and on before attempting to connect it to the app on your phone. The exact steps for setting up a Bluetooth connection between your app and the card reader will vary by provider, but you’ll generally need to press a Bluetooth button on the card reader and select “pair” once it pops up as an option on the app. Most providers have set up guides on their websites. Once you’ve completed this step, you generally won’t have to do it again, even if you exit the app and turn off your card reader.
3. Start taking payments: Once your app and card reader are paired, you can start taking payments. You’ll use the app to enter the amount your customer needs to pay, and they’ll simply need to tap or insert their card into the card reader. If your chosen card reader accepts digital wallets, customers can use their phones to pay.

How Much Does It Cost to Take Payments via Mobile?

The costs of taking payments via mobile will vary depending on what payment processing provider you’ve chosen. Here are common fees to look at for:

Card processing/transaction fees

These are charged by all providers and are based on a percentage of each sale/transaction. The average UK card processing fee is 1.75% per sale, but depending on your provider, you may pay more or less. SumUp, for example, charges fees of 1.69% per transaction.

The type of card the customer uses to pay can affect the transaction fee. 1.75% is the average processing fee for UK personal cards, however, commercial cards, international cards, and certain credit cards such as Amex usually incur higher processing fees. These are typically 2.5% or higher.

However, not all providers charge extra for these cards. Tyl by Natwest, for example, charges the same rate of 1.39% +5p for UK and EU cards, both personal and commercial.

Card reader costs

If you’re using a mobile app alongside a mobile card reader to process card payments, you need to factor in the cost of buying or renting the reader. Providers such as Square, SumUp, and Zettle sell their card readers for one upfront price, with prices varying between £19 and £39.

Set up fees

Most providers that offer mobile payment solutions don’t charge setup fees, since they’re mostly zero-contract providers, and the mobile card readers can be set up by the merchants themselves.

Monthly fees

The same goes for monthly fees, most providers who offer mobile payment options don’t charge monthly fees. This is because they sell their card readers outright (so no rental costs), and because they charge fixed-rate transaction fees, which are usually higher than the negotiable fees you get with traditional contract-based payment processing providers.

If they do have a monthly fee, it’ll be around £10 to £30 per month for most small businesses.

Refund and chargeback fees

Most providers don’t charge merchants for refunds, however, they’ll refund the sale amount minus the processing fee percentage cut. So, if you refund a £5 sale you’ll get slightly less than £5 back.

Almost all providers charge chargeback fees. They vary from £10 to £20 per chargeback.

If you’re not sure what a chargeback is, it’s essentially when a customer disputes a charge as fraudulent after the fact, instead of asking for a refund. You can take steps to dispute this, but if the chargeback gets approved, they’ll get refunded the money, and your payment processing will charge you a fee.

Too many chargebacks can cause your provider to put a hold or freeze on your account, which can lead to an even greater loss of income, so it is best to avoid them by communicating with customers and making refunds easy. Luckily, if you’re selling in person, you’re less likely to receive chargeback claims, since they’re more common for online sales and subscription-based products.

Additional fees

You’re not likely to pay additional fees if you’re just using a provider’s mobile payment processing services, but if you opt for additional services these can come with extra fees.

Services such as using an online payment gateway to sell online, a virtual terminal for over-the-phone payments, or using the provider’s invoicing tool typically come at extra costs. This includes a monthly subscription fee for the service and higher transaction fees than you’d pay for in-person payments.

Some providers, such as SumUp and Square, don’t charge monthly fees for using an online gateway, but nearly all providers will charge higher fees for “card-not-present” payments, such as ones made online. This is because these types of transactions are considered more risky, so providers charge extra for the incurred risk.

Providers That Offer Mobile Payments Solutions

Here’s a list of providers that offer mobile payment solutions. We’ve specified what type of solution they offer, whether it’s a Tap to Pay on Phone app, mobile card reader, or both.

As you can see from the table above, most of these providers are zero-contract, offer fixed transaction fees, and don’t charge monthly fees. This makes them a great solution for new or casual sellers interested in setting up quickly and minimising monthly overheads.

If you’re not sure which is right for you, see our guide on how to choose a payment processing provider for your business.

What Businesses Are Best Suited to Taking Payments via Mobile Phone?

Mobile payment solutions are best suited to businesses that sell on the go and need a compact system, new businesses not ready to make a significant investment, or sole traders that only take occasional payments and so don’t require a full payment processing kit.

Here are some examples of businesses that are suited to mobile payment systems, and what type of system is best for them:

• Market, street, and festival vendors: We recommend mobile card readers over a Tap to Pay app, since they look more professional and avoid you having to hand a phone over to a multitude of strangers throughout the day.
• Pop-up shops: We recommend a Tap to Pay app if you want to save yourself the trouble of investing in a card reader. However, if your pop-ups get very busy, it might be safer to invest in a card reader to keep your phone safe.
• Food trucks: We recommend a mobile card reader that sits on the counter of your food truck over a Tap to Pay app so you can avoid constantly having to lean out of your truck to bring your phone closer to your customers’ cards.
• Freelancers who meet clients in person: We recommend a Tap to Pay app if you want to avoid paying for an invoicing tool, which usually comes with monthly fees and higher transaction fees than for in-person payments.
• Independent service providers (plumbers, electricians, personal trainers, etc.): If you charge large amounts, your customers’ bank may not allow them to make a contactless payment, so we recommend a mobile card reader over a Tap to Pay app, since card readers allow your customers to make chip and pin payments.

Alternative Ways to Take Payments

If you’ve decided a mobile payment solution isn’t for you, but still want a way to take payments without investing in a hardware kit, here are some alternatives:

Payment links

You send URLs to customers via text, email, or even social media messaging, which takes them to a secure checkout page. Many of the providers we mention in this article, such as Square, Stripe, SumUp, Zettle, and Tide, allow you to generate and send payment links to customers.

QR codes

You generate a QR code that customers can scan with their phone’s camera, which takes them to a secure checkout page. QR codes can be printed out, or scanned by customers directly from your phone. The same providers we listed above for payment offer QR code generation.

Virtual terminals

Virtual terminals are mainly used for taking payments offer the phone. Your customer gives you their card details, and you enter them into a secure online payment terminal on your end. Most of the providers we listed for mobile payments don’t offer virtual terminals, except Square and Tyl by Natwest. You can find a full list of virtual terminal recommendations on our page.

Invoicing tools

Invoicing tools allow you to generate professional-looking invoices that contain a payment link and that you can email to clients. Square, Stripe, SumUp, Zettle and Tide all offer this tool.