The Mobile Payment system is one of the significant advancements in the retail payment infrastructure. The way it is gaining traction worldwide, no wonder that mobile wallet users are expected to increase to 4.8 Billion in the forthcoming years. Millennials and Gen-Z find it the most convenient payment method, and the businesses that do not support this mode of payment are likely to lose sales.
The origin of mobile payment stems from the digital or electronic transfer of funds. Digital wallets enable users to transfer funds between transaction accounts, which can be traditional or electronic bank accounts. When this digital wallet is embedded in mobile devices, it is known as a mobile wallet. The purpose of this wallet is to store essential payment instruments such as debit/credit cards to allow electronic payment.
There are a variety of mobile payment systems because some are suitable only from the sale’s point of view, others are appropriate for online purchases, and some work well in both scenarios. Let’s have a rundown on some of these systems.
- Near-field communication: The contactless payment system operates through mobile wallet apps following the radio frequency. This technology functions with the help of Near Field Communication (NFC) chips embedded in mobile devices and a card reader with the same chip. So, these chips can transfer data when they are close to each other which promotes money transfer.
- Magnetic Secure Transmission (MST): This is a form of mobile payment in which the devices emit magnetic signals, similar to the magnetic streak available on traditional payment cards. This technology eliminates swiping cards because it wirelessly transfers magnetic waves from mobile devices to card readers. Due to this, the card reader device becomes the contactless payment receiver.
- Sound-wave based: Another form of payment that represents the state-of-the-art aspect of technology where sound waves enable contactless transaction of funds. Internet connection or smartphones are not necessarily required for this payment method, but any regular cell phone with a microphone and speaker is sufficient. The POS terminal emits sound waves. It is received by the mobile device and converted into analog signals.
- Quick Response Code (QR Code): This mobile payment mode is probably the most commonly used, not only for funds transactions but QR code is used to scan through any information in the digital platforms. For payment, the customers scan the merchant’s QR code and finalize the payment details.
- Payment Links: This mobile payment method is established through the communication channels between the merchant and the customers. A payment link is shared through an SMS, mail, or chat, and once the link is clicked, it leads to a secure web page where the details need to be furnished to confirm the transaction.
- Bank Transfer: Mobile banking has taken over most traditional banking happening worldwide. These transfers are either person-to-person or mainly for the payment of products and services. Most banks or any payments bank transfer can take place with the help of banking apps, which are very simple to download and operate.
The onset of the pandemic has undoubtedly changed the entire economic and financial framework of retail banking. However, it has caused a significant shift in the consumer’s expectations. Mobile payment ensures the flexibility, security, and convenience they have always wanted.