Transforming Business With Mobile Payments Small businesses are embracing new mobile payment systems, allowing them to make sales without the high fees and long-term contracts associated with traditional credit card processing.

When Miki Nishihata opened Hello Bicycle in October 2008, he had some cool ideas for drumming up business. He stocked the quirky bike shop in Seattle's Beacon Hill neighborhood with an ice cream machine and an espresso maker--big hits, of course. But he was missing one important feature: His was one of 26 million U.S. small businesses that don't accept credit cards.

"Credit cards and me didn't get along," Nishihata explains, citing "exorbitant" monthly fees, long-term contracts, the cost of buying a card reader and the need for a dedicated phone line. As a cash business, he did OK, but felt he was likely losing out on some sales.

Then, a customer introduced him to the idea of mobile payments. "I heard about this thing called Square, and that all I needed was a smartphone and I could take American Express cards without anybody having to pay extra for it," he says.