Lyft, Uber show benefits of accepting mobile payments

Peer-to-peer ride sharing has gained popularity in recent years with the growth of car services such as Uber and Lyft. According to VentureBeat, Lyft has given more than 1 million rides, and in September 2013, Uber was valued at $3.5 billion. The success of these companies has come from their innovative practices, including using social networking to connect riders to drivers. One of the most notable strategies of these businesses is the use of mobile payments, which has benefited both the firms and their clients and has likely lent to the prosperity of the services.

Ease of use
Both Uber and Lyft work on the same principle. Consumers download a mobile application and enters their credit card information, then uses this to electronically hail a car. Once the trip is over, the app automatically charges the card. Both the company and the driver get a portion of the fee.

One of the appeals of this kind of mobile option is how easy it is for both the driver and the rider. Drivers don't have to worry about anyone skipping out on paying for their ride, since a car can only be requested after credit or debit information has been entered. It also assures them a tip, since that's included in the charges. There are even times, especially during very busy hours, where a surcharge is added to encourage more people to offer rides during that time. The additional charge goes directly to the driver.

Riders can use their mobile device to track where the car is and see the driver's ratings from other rides. Instead of waiting outside to hail a taxi, the process is automated, and the rating system provides travelers with a peace of mind. It also means customers don't have to worry about if they have a credit card or cash on them like they would with a traditional taxi service.

Customer loyalty
The use of mobile compensation options can also help increase client loyalty. According to the Accenture's Mobile Payments Survey, once a customer has used a mobile payment option once, they are more likely to regularly choose that service.

Businesses can also easily aggregate data through these payment options, which can be utilized to increase sales by means of targeted discount offers through the app. For instance, 60 percent of clients in the United States would use a service with mobile payment more if it offered instant coupons, and 46 percent would spend more money per transaction if these coupons were provided, as stated by Accenture's survey.

These services not only encourage current customers to increase utilization and spending, but also entice non-users to switch. Twenty percent of non-buyers said they would be motivated to become clients due to incentives.

Benefits to the business
Riders and drivers aren't the only ones who have benefited from mobile payment processing. The Federal Trade Commission published a paper that stated that mobile-based options have lower transaction fees and greater security than other compensation options. The reduced risk of identity theft can protect consumer credit data and the company's reputation. It also becomes much easier to track transactions and lowers fraud, while increasing the firm's ability to collect vital client data.

ACH payments on the rise
ACH payments are also growing more popular with both businesses and clients. The National Automated Clearinghouse Association released its network statistics on ACH payments, which said these forms of transactions are on the rise, including mobile compensation options and ACH cards. The growing acceptance of these types of transactions is a shift that companies can take advantage of, benefiting both themselves and consumers.