Mobile Payments: Wallet Technology and Usage Benefits
Wallet technology security and faster data transactions through mobile devices might fuel it as a primary at counter way of payment.
Mobile payments explanation
The way of paying through regulated transactions while using your mobile device. These payments are in the form of a peer-to-peer context where you as a customer through a mobile payment app provider with a linked credit or debit card are transferring funds to another customer’s mobile app or are paying at a checkout counter.
This article will be structured in the following way so that both consumers and businesses get an idea of how do mobile payments work and what are the requirements of obtaining such.
Brief Overview of Mobile Payments
The technology transformation has enabled many efficient ways in everyday lives that affected the way of living, such as easing the way we pay in certain situations. Those situations might be entitled to the online buying and paying process or the offline one — in person at the store counter.
As you will see in the below graph of the most popular consumer payment methods for the United States, mobile payments are in 4th place based on the market research consumer survey by Statista in 2019.
Mobile payments are one way of on the shop counter efficient ways of paying and are defined as:
„Purchases, bill payments, charitable donations, payments to another person, or any other payments made using a mobile phone. This includes using your phone to pay for something in a store as well as payments made through an App, a mobile web browser or text message“ (Federal Reserve Board)
Check the Apple Pay mobile payment explanation:
To use them, consumers need to link their credit or debit cards while setting up the mobile app/wallet from a certain provider to be able to use this function. This way generated payments are secure and efficient, while the overall contactless payment market is estimated to grow by 26% till 2025 as seen in the graph below.
Furthermore, certain payment technology needs to be implemented by businesses to accept customer’s payments via mobile payment providers.
What is Mobile Wallet Technology and its Benefits?
For you to be able to use the mobile payment app there needs to be a digital wallet inside it for you to securely store your bank details. Customer and business digital wallets are a bit different in a way that for a customer the above-explained process is satisfactory to use the service, but businesses require a point-of-sale (POS) system that can accept such transactions.
Furthermore, mobile wallet technology work through radio-frequency identification (RFID) or radio waves which makes it a contactless way of payment. The RFID is underpinned by near field communication (NFC) that allows two devices to interchange data.
The overall process of the mobile payment process is the following
- At the store checkout counter, you will hold your mobile device in close range with an NFC-enabled POS.
- The proximity should not be more than 5cm (2“)
- The payment processes are in a contactless way and you receive a confirmation while your card linked in a wallet is being charged
- Take your groceries and off you go ☺
But you might ask yourself
- Why didn’t I just use my contactless credit or debit card?
Well, you could have but by using mobile payments, you do not need a „real“ wallet as you have your mobile device and therefore are easing your life.
- How do I know that my transaction is secure?
Mobile payment apps interchange your linked card details with the issuing bank through tokenization. Tokenization is a secure way of paying because it does not interchange your card details with a third party, as the details have been transformed into randomly generated numbers and as such are not readable nor transferable.
- What do businesses need to do to implement such payment acceptance?
For an easy transition into a more advanced level of accepting payments, businesses need to either upgrade their current equipment or buy a completely new. There is an easy to follow article from PCMag about the best point-of-sale (POS) Systems of 2020 for you to follow.
Mobile Wallet Payment Providers
To get in the game you need to have two requirements
- Smartphone
- Will to accept innovations and ease your life
While most of the wallet providers are concentrated in China and United States some are working across the globe.
As can be seen in the graph below from Statista Worldpay 2018 Global Payments Report the most commonly used are Apple Pay, Samsun Pay and Android Pay but all have variations according to the funds, additional ways of paying, geographical or technical availability. Furthermore, to get familiar with the TOP providers check the best mobile payment services of the 2021 review comparison.
Mobile Payments Future
It’s certain that the future for mobile payments is bright, although there is still much to be done for it to become more important than cash or credit/debit card on the counter usage.
Firstly, technical issues, as well as the geographical location while at the same time security and transparency of the transactions, are valid which is the most important factor in obtaining such payments.
Secondly, new inventions in blockchain technology have further increased possibilities of not only checkout payments but inter-continent immediate transaction process.
By combining geographical location and data security mobile payments will have a green light for wide usage.
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