Some advisers moving to mobile payment systems to bill clients

More Americans every day are using mobile payment systems to pay for cab rides, online purchases and their favorite drinks at Starbucks.

With online payments reaching $235 billion last year and projected by research firm Gartner to hit $720 billion by 2017, it’s reasonable to expect clients to start inquiring about using virtual wallets to pay for advisory services.

A few advisers who target younger investors are getting out ahead of the curve, testing the benefits of different mobile pay platforms and figuring out they are not all created equal.

At 360Dividends, the financial planning firm operates mostly virtually, so “it was imperative to find a merchant services solution that would allow seamless integration” with the firm’s website for online payments, said adviser and owner Marcos Lira.

At the same time, the firm needed to be able to process client payments in person, so the technology choice had to also provide a card slider.

The San Jose, Calif.-based firm eventually chose PayPal, one of the world’s largest online pay systems. Its benefits include two-step authentication to verify the user, compliance with Payment Card Industry Data Security standards, and “it plays well with others,” Mr. Lira said.

“I can easily integrate PayPal with a number of applications which I use on a daily basis, from accounting software to forms/invoice/surveys to my online scheduling software,” he said. “It also looks beautiful when integrated with my online shopping cart.”

One distinction among the different systems is the cost.

The transaction costs charged by mobile pay systems — such as PayPal, Google Wallet, Square, Venmo and LevelUp — varies. Most require users to cough up a few percent on the value charged, and some have a per-transaction fee.

Mr. Lira recommends advisers ask the different platforms to show them what a monthly bill is likely to look like based on their expected number of transactions.

Clients of Rebel Financial in Gahanna, Ohio, also pay for services with PayPal. Owner Phil Ratcliff said PayPal charges monthly fees that are actually lower than what he would pay if he were to set up merchant accounts with all the different credit card firms.

Advisers should carefully check out the security features of any third-party payment system they consider using, Mr. Ratcliff said.

The pay system also needs to be appropriate for whatever pricing model the adviser uses.

Gen Y Planning charges clients a monthly retainer. Adviser and owner Sophia Bera has her clients set up monthly recurring payments through PayPal so they only enter their credit card or banking information once.
Each month the fee is automatically charged without the client having to go online and click “pay bill,” she said recently in an InvestmentNews webcast.

Kate Holmes, founder of Belmore Financial, mentioned on the same webcast using QuickBooks Online at her firm, but said she was looking into a move to a company called Pay Simple.

“I love paying for things on my credit card — to get those travel rewards — so that’s something I talk with people about,” she said on the webcast.

Many of these services also have or are developing applications that allow them to be used as so-called mobile wallets, which store account information and allow users to make payments using their smartphones at checkouts armed with readers.

Apple Pay, a mobile payment and digital wallet service from Apple, most recently joined this competitive and constantly changing marketplace.
The firm’s technology was unveiled in September as part of the iPhone 6 and other Apple devices.

Rich Van Loan, an Ameriprise Financial adviser in Charleston, Mass., said he uses Apple Pay personally.

He’s used Apple Pay at Whole Foods and Starbucks and “really enjoys the convenience, speed and simplicity” of the payment system.

“It just works,” he said.