Nowadays smartphones have taken an important role in our everyday life. Every time you look around it’s immposible not to see anyone using a smartphone, no matter if it’s an Android device, Apple, or Windows phone. Smartphones have replaced all the other objects you may have used before. You don’t need anymore to have lots of gadgets inside your pocket. A smartphone is everything you need. With plethora of apps you can find almost anything.
A smartphone is not a simple phone just to make calling and send text messages. It’s your camera, MP3 player, notebook, personal assistant and much more. The latest high-end devices are becoming also your medical assistant. You may have heard also that smartphones are replacing the plastic credit cards for online transactions. This is a good thing and the number of users who are adopting mobile payments system is growing up. It is considered as the safest method of online transaction.
But what is mobile wallet technology? Well, until now there is no exact definition of mobile wallet. To understand it well, Mobile Wallet is a system that allow its users to make online payments using their smartphones. So instead of paying with credit cards, check or cash money you can use your phone to pay for any kind of service or products.
A Mobile wallet is the digital equivalent of the physical wallet we all have in our pockets. It contains digitalized valuables waiting for an authorization. These valuables can grant permissions to access goods and services in different places. But why it’s better to use mobile payments rather than physical payments like cash or credit cards? Here is a well-explained article about pros and coins of mobile payments.
Mobile Payments Types
According to Wikipedia Mobile Payments are classified in four major types:
- Premium SMS, MMS based Transaction.
- Direct Mobile Billing.
- Mobile Web Payments (WAP)
- NFC (Near Field Communication) Payments.
Let’s go into details and understand better each one of this method.
- Premium SMS, MMS based Transaction.
This is a mode of payment where the buyer sends a payment request via text message or an USSD to a short code. After the message a charge is applied to the customer phone bill or online wallet. In the other hand the merchant is informed that the payment is made so it can release the services or goods. This form of online payment is very popular is Asia and few countries of Europe. This method has its own drawbacks such as Security issues, Slow Speed, High Cost, Low Payout Rates.
- Direct Mobile Billing
This is that type of payment used during the check out processes at e-commerce sites. It’s a secure mobile payment method and involves a two factor authentication, a PIN and an OTP (one-time-password). After that the customer’s phone is charged for what he has purchased.
Sometimes the amount may include taxes and a processing fee. To do a Direct Mobile Payment you don’t need any registration, credit cards or bank account. Direct Billing method is popular in Asia. The advantages of this payment method are: Security, Convenience, High Speed, Easy to Use and Safe.
- Mobile Web Payments (WPA)
The customer navigate through specific web sites or applications installed on its device to make the payment. This method uses a Wireless Application Protocol (WAP). This method is used worldwide due to its advantages. It’s easy to use and the customer is happy with the service.
- NFC (Near Field Communication) Payments
This is a payment methods used mostly in paying for purchases made in the transport services and physical stores. To make a payment customers use their mobile phones which are equipped with smart cards. All the payment procedure consist in waving the phone near a reader module. Some of the transactions don’t require any verification while some others require a PIN verification before the transaction is completed. The payment may be deducted from the customer bank account, charged from a pre-paid card or even from it’s mobile phone.
NFC Payment Systems always change for wide and fast and implementation due to the nonexistence of standards, complexity of the stakeholders ecosystem and unavailability of supporting infrastructure. Mostly of the banks are enthusiastic about these changes. They also try to make it easier for customers to pay using NFC technology.
By the next decade making payment using mobile phone will be a normal thing. This is supposed due to the fact the the number of users who use the smartphone to do online payment is highly increased over the past years and users seem to be happy for what they do.
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