With the increased use of mobile devices, the rise of mobile payments was a natural occurrence. The way that we pay for products and services has transformed drastically over the years. Checks and cash have gradually been phased out by debit cards, prepaid cards and credit cards. Now, we’re starting to see the emergence of mobile payments that will eventually eliminate the need for credit cards and create virtual wallets.
There are several methods currently in use to enable mobile payments, and more are sure to come. Currently, a popular way to accept payments with a mobile device involves using a credit card swipe device that attaches to a mobile device. Square.com and PayPal are the the pioneers of this technology. Another modern approach that will likely become the standard involves using NFC payments which don’t require using a physical credit card at all.
NFC Mobile Payments
Near Field Communication (NFC) mobile payments allow consumers to pay for items using an app and a NFC reader in retail stores. The customer just has to scan their NFC enabled device on the NFC reader to make a payment. NFC technology speeds up the entire checkout purchase and cuts down on the long lines that plague busy retailers.
Earlier this year, Visa and Samsung announced that they would be teaming up to incorporate NFC payment systems into future Samsung phones (and most likely tablets as well). Visa will be providing the secure element for Samsung devices which allows payment processors to communicate with banks. This will help NFC payments become a possibility globally. Combining Visa’s already existing infrastructure with mobile payment apps will make purchasing items at retail stores, bank transactions, and even using vending machines much more convenient and more enjoyable as can be see in this video.
Google has been attempting to take over the NFC mobile payment arena recently with Google Wallet, but due to Visa’s global structure, Google will have a tough time competing on the same scale. There are several other companies in the NFC mobile payments sector as well such as ISIS, PayPass, and others.
1-800-Flowers Tries Expedite
In February, 1-800-Flowers began testing out a new mobile payment method that allows customers to make payments anywhere without needing a credit card at the time of purchase using a service called “Expedite”. The way the process works is:
- You find flowers on the 1-800-Flowers mobile app and checkout
- At the checkout page, you choose the “expedite” payment option
- Login with Facebook
- After you’ve bought your items, you’ll receive an email asking you how you would like to pay
The option is an attempt to make purchasing on the mobile app easier, faster and more convenient for consumers.
Apple has also adapted to the mobile payment movement with their Passbook feature that they introduced in their latest operating system update. Passbook allows users to store “passes” to a variety of retailers and companies that can be used to make payments straight from your iPhone, iPod Touch or iPad. You can currently use this feature with Dunkin Donuts, Starbucks, Fandango, airlines, and a few other companies as well.
Using passbook requires you to load up your passes for whatever retailer you’re purchasing from with money and then using it like a digital gift card. Again, the key benefit is to streamline the checkout process and eliminate the need for using cash or credit cards.
M-pesa's penetration into East Africa
Vodacom and Safaricom launched the most successful mobile to mobile payments platform in East Africa 6 years ago, where anyone can ‘top-up’ his/her mobile phone account with virtual money and use this balance to transfer payments to other mobile phone subscribers, the M-pesa platform uses the USSD technology which is simple and accessible also by non-smart phones. They currently have almost 20 million subscribers.
Mobile payments certainly look to be the future of processing payments. Companies will be able to lower their costs by not having to invest in costly POS systems that can physically break and require consistent maintenance. Mobile payments also allow businesses to service customers quicker which can improve customer service. Over the next few years, mobile payments will continue to improve and will likely become the standard for making purchases in the future.
Eran Feinstein is the founder of 3G Direct Pay Limited. 3G provides global e-commerce and online payments solutions for the travel and related industries He is a leading authority in the fields of e-commerce, travel and payments, having acquired extensive experience from various parts of the world.