Thanks to the developments in Smartphone and Tablet computer technology, the ability to pay for mobile devices is now a reality. However the industry is now overflowing with different technologies as well as a multitude of companies all looking to feature on the mobile payment landscape.
Whilst for businesses and retailers this presents a huge opportunity, with so many different mobile payment technologies to choose from, it can be a little confusing to fully understand all of the options available and how they can help businesses and consumers alike.
With this in mind, let’s take a closer look at the different types of mobile payment options available; but first, let’s clear up what mobile payment actually is and how it works.
In effect, mobile payments involve any sort of payment service that is carried out on a mobile device – so that’s a mobile phone, a Smartphone, a Tablet and so on. It allows consumers and businesses to process payments and transactions without the need to actually hand-over traditional forms of tender. This can be good news for both the business and consumer.
From the business’s perspective, it means that a greater number of people will be able to pay for products especially fast moving consumer goods (FMCG). With more payment options available, shoppers may be encouraged to spend more when out-and-about. From the consumer’s point of view, mobile payment allows them to always have some form of payment option available, even if they leave their wallet at home. Whether you need some lunch, a cab or a coffee, if you don’t have your wallet, don’t worry, you can pay using your mobile device.
So what mobile payment options are available to consumers and businesses? There are four common types of payment processing, which are as follows:
This is one of the newest methods in which to pay for things via a mobile device. Users download what are known as Online Wallets to their mobile phone; this will then provide them with an Application that can be opened up with a secure pin code. Once opened, users can pay a store or a service provider using their mobile wallet. The way this is achieved is via the app; you tell your app to send a payment from your bank account or credit card to the store or service provider.
Key players within the Mobile Wallet game include Paypal, Visa, Mastercard and Google – all of whom have developed mobile wallet apps for consumers to use. Whilst this is a fairly secure way of making payments, it can be quite a lengthy and time-consuming process; until the technology becomes faster and sleeker.
When people think of mobile payment, contactless technology such as near field communication (NFC) is what most generally think of. This is the earliest form of mobile payment, and was generally touted as the winning technology within the race for mobile payment supremacy. NFC allows consumers to pay for goods and services by simply tapping their phones against an NFC device in store or on the premises of the service provider.
Approximately 50,000 stores across the UK have installed NFC devices, and big companies like Barclaycard and Orange have teamed up to create Apps such as the Quick Tap to facilitate these payments. The Google Wallet, which also utilises NFC, has been created by Google working in partnership with CitiGroup and MasterCard. However the technology is not without its critics, and whilst NFC was once the stand-out candidate, newer alternatives that don’t require specialist technology and hardware are now making their way into the market.
PayPal are just of the many companies that have been busy developing faster and more secure mobile payment technology. In effect, mobile point of sale allows consumers to download apps, like the Paypal App. This will then provide the user with a unique barcode which can then be scanned by the retailer to collect the payment.
The key to mobile point of sale is that companies like PayPal get retailers and businesses on board, allowing for better traction with consumers. For example, recently PayPal announced they have teamed up with the Aurora Fashions group, which includes retailers such as Coast, Oasis, Warehouse and Karen Millen. With their app being available on both iOS and Android devices, there’s a lot more scope for this form of mobile payment to achieve greater things. As a result, this form of mobile payment is the one that many are now beginning to identify as the future market leader.
Much in the same way that mobile point of sale works, loyalty schemes allow users to download brand specific apps such as Starbucks iPhone app. With the app being integrated with its loyalty card, users can manage their card balances and top-up their credit direct from their mobile phones. Once a user wants to purchase a coffee or something else within the store, they will be presented with a unique barcode. Again, this will get scanned, and the appropriate amount will be taken from the user’s account.
O2 Wallet and Barclays Ping-it are two examples whereby users can transfer money to the accounts of their friends and family. This is not a consumer to business model of mobile payment, but rather a way that users can transfer varying amounts to one another. Whether this is in the form of an app, or a text message, the idea is that you can send money to and from current accounts swiftly and risk-free.
So there are a number of options now available in the mobile payment market, with new innovations and improvements being made to existing products all the time. It would be fair to say that we are still only in the formative stages of the development process, as such the future is still very much open in terms of what may still be possible.
This guest post has been written by Insurance2go, one of the first insurers to provide mobile wallet protection.