Mobile payment options grow for small companies

— -- Small businesses are using technology to help them operate more efficiently and cost-effectively in an increasingly competitive environment. Each Monday, USA TODAY looks at new ways companies are gaining an innovative edge in a tough economy.

If all goes as planned, customers of family-owned Ben White Florist in Austin can start buying flowers this month by swiping a smartphone at checkout.

Representatives working for Isis, the mobile-payment company behind the technology, have been working with the shop's owner, Michael Martinez, to prepare for a new mobile payment system that can accept most credit cards, including American Express and Discover. That the system is free for now — subsidized by Isis — helped persuade Martinez to give it a try.

Martinez concedes that customers with smartphones sophisticated enough to use the technology will initially be a tiny group. "But Austin is a tech-savvy city. Customers don't want to do business with companies that look outdated. And it makes us seem like we're on top of things," he says.

As the retail world increasingly turns mobile, Martinez echoes the sentiment of thousands of small-business merchants drawn to mobile payments as a marketing boost and a salvation from the shackles of expensive point-of-sale terminals and magnetic-stripe card readers.

Small merchants are considered ideal testing grounds for new payment products because the businesses are nimbler in experimenting with new ideas and seeking customers in settings beyond bricks-and-mortar stores.

"We're seeing a huge explosion in small business," says Ebrahim Keshavarz, vice president of small-business product management at AT&T. The company is working with mobile payment developers that want to use its wireless network.

Eyeing the growing number of customers who rely on their "digital wallets" — credit card numbers stored on a phone app — small business owners are scrambling to find efficient means of accommodating these early adopters without too much cost to their operations or the need to overhaul existing payment systems.

Apps for tablets and smartphones that can scan credit cards have been offered as early answers. In February, about half the retailers polled by the National Retail Federation say they will use a mobile device as a cash register within a year to 18 months, compared with 6% that use them now.

Meanwhile, mobility solutions also are being developed for on-the-go merchants who derive sales from county fairs, trade shows and farmers' markets.

Because the technology is still in its infancy, "mobile payment" is something of an umbrella term that refers to a wide variety of approaches, including paying with: a smartphone equipped with a special chip; a credit card number stored in a phone app; or a key-fob-size device that turns a phone or tablet into a credit card processor.

Worldwide mobile payment transactions will total $171.5 billion in 2012, a 62% increase from $105.9 billion last year, and could reach $617 billion by 2016, according to research firm Gartner.

Consumers are still wary of sharing stored financial information, concerned about privacy, fraudulent charges, personal information being distributed to third parties, or of losing devices that contain that information.

Small-business owners are skeptical about spending money on yet another piece of hardware. With so many options available, consumer confusion is inevitable.