What are different types of Mobile Payment Methods?

 Payment processing is critical to any business. If it wants more sales and happy customers, it should offer the best buying experience possible. Mobile payments, i.e. electronic payments processed through a smartphone, tablet, or smartwatch, help with both tasks. 

 

The penetration of mobile devices into our daily lives and shifting away from cash have resulted in the rise of effortless direct, real-time mobile payments. Millions of consumers have appreciated shopping with mobile devices, but many vendors still don’t know that their tablet or smartphone can replace the cash register, banking terminal, and analytics system for their small business.


Different Mobile Payment Methods


Classification is important because different types of mobile payment apps support different methods.  Let’s see at the most popular mobile payment methods.


Mobile as point-of-sale


This method is most effective for in-person sales, e.g., at small stores, restaurants, markets, or events like fundraisers or trade shows. Businesses and organizations can turn smartphones or tablets into point-of-sale (POS) systems for on-the-go credit card acceptance.

 

An add-on credit card reader can be paired with the mobile device, allowing customers to swipe, dip, or tap credit cards to make a payment and the vendor to accept it on the spot.  

 

Even without a credit card reader, they can log into a virtual terminal app on their mobile device and manually enter credit card or ACH information to accept payments.


Clover, Lightspeed, Shopify, Square, Toast, and Vend are some of the popular mPOS systems for smartphones and tablets.

 

Advantages:

  • credit card model
  • suitable for small businesses that have no cash register
  • there is no need to install a mobile payment system for a consumer

 

Disadvantages:

  • often higher transaction fees compared to other systems
  • not suitable for businesses with large revenue due to the systems’ fraud detection mechanisms
  • risk of a credit card or identity theft

 

Mobile at the point-of-sale


These payment systems are known as mobile wallets. They are saved on mobile devices. Contactless payments are conducted using near-field communication (NFC) or "tap and go" technology. Businesses wanting to accept such payments need an NFC-enabled mobile card reader and/or the appropriate mobile app. A customer waves their mobile device across a reader that wirelessly captures the relevant payment information to complete a purchase. For a payment Gateway help check with  Mobile App Development Company in Gurgaon.

 

Nowadays, most mobile devices come with NFC technology. Apple Pay is available on iPhone 6 and newer models. All Android phones are equipped with Quick Access Wallet, many with Google Pay, and Samsung phones – with Samsung Pay app. In addition to preloaded apps, users can install third-party mobile wallets, such as PayPal and Venmo. 

 

Mobile wallets are handy not only for in-store payments. Customers can also check out online using a mobile wallet if the vendor accepts their preferred app.

 

Advantages:

  • NFC technology is available on most smartphones
  • consumers can use their mobile devices instead of carrying around cash or debit/credit cards and having to swipe or dip the cards physically
  • contactless payment systems are safer than card swiping 

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Disadvantages:

  • credit card data is saved in the system
  • sensitive information is exposed to the payment system’s owner
  • possible cooperation issues between credit card service providers, phone manufacturers, and merchants

 

Mobile payment platforms


Platform systems are based on WAP (Wireless Application Protocol) technology: a mobile device connects to an online payment system or requests card data via a website.

 

Mobile browser-based payments enable card-not-present purchases with a credit, debit, gift card, or even ACH. Using a smartphone or tablet, they can visit an online store, add products or services to a shopping cart, and enter payment details into the website’s checkout form to complete a purchase.

 

In-app mobile payments are similar, but users open up the store’s or business’ mobile app instead of a website. Having registered their card or ACH information once, they can make purchases, download content, or pay bills with a few clicks using that information.


Advantages:

  • credit card data is security encoded
  • no need to carry a credit card

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Disadvantages:

  • bank and card service fees apply
  • possible cyber-attacks on the system

Direct carrier billing


Payments in these systems are tied to a consumer’s monthly phone bills either through SMS or in-app billing. Mobile bank transfers are more common for bill and peer-to-peer payments. They are transferred directly out of the consumer’s bank account into the payee’s account.

 

Boku, Docomo Digital, Fonix, Fortumo, and Google Pay are examples of direct carrier billing providers. 

 

Advantages:

  • no need to have a card reader, POS, or the newest smartphone model to make purchases
  • no need to create a username and password
  • no credit card or personal details are required
  • only one bill that is tied to a mobile service provider

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Disadvantages:

  • system use is limited to buying digital content (e-commerce)
  • higher fees for SMS
  • SMS is sometimes slow or does not reach a user’s phone

 

Closed-loop mobile payments


Large companies, such as Facebook, Starbucks, or Wargaming, have their own billing systems.  A user downloads a branded payment system application, puts money on a debit card to pay for their future purchases, and receives a full scope of store services: coupons tracking, gift cards, loyalty rewards, etc. The payments are deposited and withdrawn directly from that card.

 

For instance, Facebook Pay allows people to use Facebook, Facebook Messenger, Instagram, and WhatsApp to send money to other people. Linked payment methods include a debit card of their choice or an existing PayPal account. 


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