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With preferences for carrying and using cash continuing to drop, more consumers expect merchants to accept debit or credit cards for payment. But not all merchants do, especially those that lack physical storefronts. Some industry insiders believe mobile-based products might help encourage them to accept electronic payments.

Judging from the discussions among peers at recent industry conferences and the spate of mobile-based products and services entering the market, the topic is on the minds of many in the industry as they consider their business plans.

Indeed, merchants find themselves faced with increasing options as “every day we are seeing more announcements about mobile payments,” notes Todd Ablowitz, president of Double Diamond Group, a Centennial, Colo.-based consulting firm.

But which is better? Cell phones with card swipes or payment-software applications that run on smart phones?

It depends, experts say. Hardware-based systems might benefit brick-and-mortar merchants because the hardware often can help speed up checkout lines. But mobile merchants may prefer software-based systems because they would not have to carry anything other than a phone when going to make a sale or accept a payment.

American Banker, June 24, 2010