The Benefits of Mobile Payments and Why It's The Future

What are Mobile Payments?

Mobile payments are the latest in the trend of digital payment methods. The good thing about mobile payments is that they are almost entirely cashless. If you go to a store and pay with your phone, you won't need to pull out your wallet or bring your credit card.
Mobile payments, also known as mobile money, refer to making payments with a mobile device. A mobile device can be a phone, a tablet, a laptop, a wearable device, a connected device, a smart TV, a connected car, a connected watch, or a connected home. Customers can download a mobile payment app on their smartphones and add their card details.
The mobile device can be used for several tasks, such as to pay for a purchase, withdraw cash from an ATM, get a cash advance from a credit card, get a balance on a credit card, identify oneself for a financial transaction, to transfer money, or to pay a bill.
Mobile payments refer to transactions made through mobile devices and include mobile wallets and mobile money transfers. With mobile payment technology, small businesses can pay for their purchases digitally through their phone without using cash, checks, or credit cards. The global mobile payment market is expected to grow to $8.94 trillion by 2027. Mobile payments have gained popularity with the increase in the usage of smartphones, Wi-Fi connections, high-speed mobile internet, and a rise in e-commerce.

The Benefits of Mobile Payments

Mobile payments have seen a sharp increase in recent times, as smartphones and other mobile devices continue to advance. Here are some of the benefits of using mobile payments-

Convenience

Mobile payments are one of the most convenient ways to pay for goods services. With the advancement of technology, mobile phones have become one of the most essential devices as almost 81% of Americans use mobile phones today. We carry our smartphones everywhere we go and they are always within our reach.
Customers widely use smartphones for online shopping and ordering food, adding a payment method makes a Simple Mobile phone even more convenient for customers. Just with just a few taps on your phone, you can make payments for your bills. The popular payment apps include Apple Pay, Samsung Pay, and Google Pay. You can avoid long lines to pay your bills at the billing counter, just scan a QR code and complete your payments in a sweep. Mobile payments allow you to send receive person-person payments digitally. You don't need to hand over cash to the other person, just transfer the amount or send gift cards from your bank account through various peer-peer payment apps such as Venmo, PayPal, and Zelle.

Security

Mobile payments are completely secure to make in-store payments. Digital wallets use Near Field Communication (NFC) technology that allows customers to tap or wave their phones to complete a transaction at a POS station. Customer data is safe during transactions as payment apps use either encryption or protected code for payments. Mobile payments do not require you to carry cash or Credit Cards in their physical form as payment apps store your credit card information digitally, reducing the chances of losing these payments methods. Even if your mobile phone is lost or stolen, your mobile wallet is safe as it has security settings that make sure that no one else can access it.
Mobile payment systems provide additional security measures including fingerprint scans, password protection, and facial recognition to ensure that data is secure and eliminate any fraudulent activities. Mobile payments are a safer and more user-friendly way of completing transactions than traditional payment methods like cash or Visa, MasterCard credit/debit cards.

Speed

Mobile payments are fast and easy to process. All you need to do is tap or wave in front of an NFC terminal and your transaction is complete. Mobile payments are contactless and secure as your card number is not shared with anyone. You don't need to swipe or insert your credit card in a card reader, making these payments fast and effortless. This also eliminates the need to enter your personal information such as card number, password, or expiry date when you make payments using a credit card. Mobile payment apps are tokenized, meaning they don't store or share your credit card details. The app verifies your information with your bank when you enter your card information initially in the app. Then it uses a token instead of your personal information.

Widely Accepted

Now mobile payments are accepted widely by many retailers and several are adding this technology fast. Customers can easily keep track of their spending as digital wallets integrate into mobile apps and software. Retailers can issue electronic receipts that also help customers track their expenditures. You can quickly complete transactions on the go with mobile payment solutions for an array of services including electricity, water, and Wi-Fi bill payments, buying groceries, tickets for flights, trains, and movies.

Types of Mobile Payments

Mobile payments provide customers and business owners the flexibility and convenience in managing transactions. A digital wallet is a wallet on your smartphone where you can handle your transactions digitally.
Typically there are three types of mobile payments. Let's take a look at these-

Mobile web-based and in-app payments

Mobile browser-based payment processing is similar to desktop-based e-commerce shopping. It allows you to buy goods services by visiting a website with your mobile devices and making payments using either a credit card, debit card, or gift card. Similar to desktop browser-based payments, mobile browser payment systems allow customers to select products or services and add them to a shopping cart. Then, they enter payment details directly during checkout to complete a purchase. In the United States, mobile sales add up to almost 50% of all e-commerce transactions, of which a large number of sales are traditional browser-based e-commerce websites optimized for mobile phones. These browser-based systems have mobile-friendly and responsive designs that are easily accessible for all merchants. The browser-based systems have rights reserved to provide entry to their system.
Mobile in-app payments are similar to mobile browser-based payment systems, but instead of browsing a website, you can navigate the app of an e-commerce shopping platform. Many retailers have online shopping platforms that provide their customers the benefits of mobile apps that allow them to shop, create shopping lists and integrate loyalty points as well as accept mobile payments.

Mobile wallets

Mobile wallets refer to apps and software that allow customers to purchase goods services securely from their mobile phones using their debit and credit card details stored digitally. Other terms used for mobile wallets are digital wallets and e-wallets. Customers enter their card details in digital wallets and make payments with their mobile phones, tablets, or smartwatches. Customers don't need to log in to an online shopping app where their information is already stored and have access to secured transactions via fingerprints or facial verification, making mobile wallets faster and safe from fraudulent activities.
Some of the top digital wallets include Apple Pay, Google Pay, Samsung Pay, among others. Many e-commerce systems have single-click mobile wallet payment as a built-in functionality that merchants can turn off or on effectively from their store setting. For in-store digital wallet payments, merchants need EMV chip-compliant point sale systems enabled with NFC and MST technology.

Contactless mobile payments

Mobile contactless payments use short-range radio waves to work with compatible card processing hardware and rely upon NFC technology that is effective up to around 20 centimeters.
Mobile contactless systems require card readers that merchants use to accept payments securely from customers' phones. Retailers can upgrade smartphones or tablets into Point Sale systems by attaching add-on credit card readers on their mobile devices. Small Business owners can get paid when customers swipe, dip, or tap credit cards and accept payments through these mobile credit card readers. Retailers can also accept mobile payment through wireless credit card readers that work similarly to a traditional credit card terminal that works with Wi-Fi to accept credit cards at multiple locations.

The Future of Mobile Payments

By 2024, about 4 billion users are likely to have mobile wallets compared to 2.3 billion users today, while mobile wallet transactions are expected to rise to $9 trillion per year by 2024. Many factors contribute to the rising numbers of mobile payments including secure transactions, convenient ways of payment, etc.
The future of mobile payment technology depends directly on the high demand for mobile point of sale technology. POS systems provide the freedom to pay mobile payments without using in-store payment systems. Mobile Point Sale technology is flexible and portable making it ideal for food trucks, trade shows, etc. Mobile wallets use an advanced biometric authentication process that makes them secure from fraud theft. Mobile apps are becoming popular by the day. It is easy to download a mobile wallet and add credit card information securely on a smartphone.
Mobile payment apps and other digital payment solutions such as peer-to-peer payment apps are safe, reliable, and secure, thus reducing the need for physical cards in different environments. Mobile payment technology is still evolving with NFC technology and changing the way customers use the mobile device even on the move.