Monday, June 27th, 2016
It’s quite boggling to find that while today’s world is enriched digitally, very little has been done to simplify the payment process. According to MasterCard the percentage of the transactions done in cash reaches 85% out of all financial transactions around the world. If we put it in numbers, it can come to trillions of dollars each year still being exchanged via cash. And as we use our mobile phones and tablets for work, some start to wonder when can mobile payments become part of the normal mobile experience. Since so many started talking about the mobile wallets, let’s clear thing up and find out what a “mobile payment” is and how it works.
So, you have a mobile phone, how do you get to pay it for the products and services? Do you just swipe it at a terminal as you would do with your credit card? Or, maybe you bump your phone with another one to transfer money, like they show us in those commercials? How do you make mobile payments? Is there any difference between those methods and what does it matter?
I’ve done some research and this is what I’ve come up with: five main types of mobile payments with list of companies offering them.
The first one is a hyped-up mobile wallet. It’s one of the major types of mobile payment that many talk about now. Mobile wallet works with “tap-and-go” method or using your mobile phone’s built-in NFC technology (wireless Near Field Communication that will be explained in more details in the next post about mobile payment systems) or it could some other method that let’s pay with just your mobile phone, as you do with the credit card. Making mobile payments is much easier and faster than paying with cash. Your mobile phone is always with you, so it’s convenient, one less thing to remember to take.
Google and ISIS are currently the main providers of mobile wallets.
Let’s leave it to Google to make a great mobile solution and simplify your life. Google mobile wallet development set off with Sprint’s Nexus S, the mobile phone that had NFC technology built in. The way it works is following: you transfer money from your credit card to your Google Wallet app, now you can tap to pay for the goods at Google Wallet merchants ( meaning places where MasterCard PayPass Network is used, though Visa, Discover, and American Express.)
Isis mobile wallet is another option for those who want to make contactless payments. For that you simply need to open Isis Mobile Wallet app, type in your pin, and select the credit card you want to pay with. Put your phone against the terminal for contactless payments and it’s done. The Isis mobile wallet also let’s you use coupons and other discounts.
Paying with your mobile phone is cool, but it’s not all you can do with it. You can just as easily use it to process credit card payments and accept payments from others. Business owners can really benefit from such a capability – fast and secure payment.
Mobile phones as a credit card terminal service is provided by two companies: Square that is an official partner of Visa, and VeriFone.
Square has developed a free mobile payment app and credit card reader that is connected to your iOS or Android device. However, you still need to pay a flat 2.75% for all credit cards.
VeriFone’s solution is more on a pricy side. Its mobile payment app PAYware Mobile supports iPhone, but that comes with a price exactly a $49 to activate it. Additionaly you still need to pay for encrypted card reader, and also standard merchant fees that amount of which depends on the financial transactions.
Apart from mobile wallet apps and using your mobile as a credit card terminal, there are other types of mobile payments. That phone bumping, I’ve mentioned earlier is also known as P2P or person-to-person mobile payment. You can pay or send money to your friend via PayPal by literary bumping your phone with your friend’s phone.
The major providers of P2P mobile payments are PayPal and Serve.
PayPal was one of the first to introduce a new way to pay for your things in the Internet. Now, to make a money transfer you simply need to bump iPhones.
Serve is really similar to PayPal in that sense that it also lets you send money from your bank account or credit card using your Android, iOS, or Windows device. However, it has some other useful capabilities, for example you can open subaccounts to manage your funds in a more efficient way and use prepaid forms of payment.
The last type of mobile payments are less popular solutions that include direct carrier billing and closed loop mobile payments, but knowing about them a bit more won’t hurt. Closed loop mobile payments mean that a company opted to develop its own mobile payment solution, for example Starbucks’s mobile app allows to tip digitally and shake to pay for the coffee.
When you decide to buy a new application or ringtone for your phone, that also can be considered as a mobile payment. What i mean is that paying for the digital content you consume on your device falls into the category of mobile payments.
Want to learn more about this new way to pay for stuff or make money by developing a cool mobile payment app? Follow us on social media, the next part on mobile payments will cover mobile payment systems.