Mobile payment systems: making the right choice

25 July 2018

There are plenty of mobile payment services and solutions in the market. Luckily, systems tend to fall one of several key categories, so bobsguide has outlined each one to find the mobile payment technology that best suits the needs of your business.

Contactless

Contactless payments is probably one the most well-known methods of paying for goods and services, with near-field communication (NFC) or radio-frequency identification (RFID) mobile payment technology baked into a range of devices including pre-paid, debit and credit cards; wearable devices like watches and wristband, as well as smartphones and tablets. In major cities around the world, contactless mobile payment technology has become commonplace as means of paying for public transport. NFC mobile payment systems allows for an almost instantaneous transfer of encrypted data to a point-of-sale (POS) device, removing the need for chip and PIN technology which was once one of the fastest and most secure payment methods in the market. However, there are some downsides to contactless payments, especially if a card is lost or stolen, as someone can make payments using the card with entering in a pin or passcode before making a transaction. For this reason, transactions permitted using contactless mobile payment software and solutions are limited to £30 and under in the UK with other countries applying similar thresholds to protect consumers.

In-app payments

Mobile payment software and solutions providers like Bambora help businesses big and small integrate mobile payments systems directly into their mobile applications making it easy for customer to make in-app purchases. In fact, software companies can supply clients with just a few lines of code which creates in-app payments ecosystem capable of processing transactions on iOS and Android apps. One of the first companies to make in-app purchases popular was Apple’s iTunes, with users able to buy their favourite music directly from the app and have it ready to play on their phone in a matter of seconds. One of the major benefits of in-app mobile payment systems is the how secure, simple and fast it is for customers to make purchases. All they have to do is create an account, register their debit or credit card information and their done. The popularity of this payment method has reached dizzying heights, with global sales from in-app purchases hitting $36.2bn in 2016 and is expected to hit as high as $71.7bn in 2020, according to data compiled by Statista.

Mobile credit card readers

It has never been easier to accept credit and debit card payments with the advent of mobile card readers representing a major step forward for mobile payment technology. Businesses and consumers are no longer burdened by old point-of-sale (POS) terminals offered by large incumbents like France-based Ingenico and UK-based Worldpay. Today, small and medium-sized enterprises (SMEs) can process payment using their smartphone or tablet using simple to use POS mobile apps. One off the major advantages of these mobile payments technology is that it allows retailers to process transactions anywhere and anytime, whether that be at a festival, food market or other off-site location. The big three in this space are SumUp, Square and iZettle. When thinking about which provider to choose from each has their benefits: Square is arguably the best all-rounder, an attribute bolstered by the fact that it is the largest of the three and, in a market where economies of scale make a big difference it not only offers outstanding features but it can offer its mobile payment services and solutions at a relatively low-cost. iZettle is on-par with its rival, especially after the company was acquired by PayPal earlier this year. meanwhile , SumUp offers fledgling companies with small budgets one of the most attractive flat rates around and its card reader comes is a bargain at just £19.

Mobile wallets

Not that long ago, if a would-be consumer left the house without their wallet they would be left high and dry at the check-out when they realised they left their credit or debit card at home, but that all changed with the arrival of the mobile wallet. Also known as a digital wallet, this handy bit of mobile payment technology stores user payment information on a smartphone which can be pulled up and used to make contactless payments on card terminals, in-app transactions and to pay for things online. Best of all, the mobile payment system, especially if you’re using Google Pay or Apple Pay uses biometric authentication software in the form of a fingerprint scanner, ensuring that should someone steal your smartphone your money is safe. On top of that safety measure digital wallets keep your financial information secure using complex encryption and tokenisation. Digital wallets are not only a great alternative mobile payments software solution, but they also allow users to store loyalty cards, boarding passes, gig tickets and more.

QR code payments

Probably one of the most unknown methods of making mobile payments is quick response (QR) codes. Many people are familiar with QR codes as something that advertisers use to link customers to particular products, services or discounts with a simple scan using the camera on their mobile device. However, a little known fact is that QR codes are an alternative mobile payment technology that is being adopted by retailers worldwide. Retailers are always looking for new ways to enable customers to be able to make in-store payments using their smartphones and this mobile payment technology offering just that, with consumers only needing a  mobile phone with a camera and a mobile app that can scan, store and share QR codes. One company that has implemented the technology en masse is US-based hypermarket chain Walmart. Customers can make in-store payments by simply scanning a QR code using the Walmart Pay app, whereby consumers financial information is connected to the mobile application and the QR code serves as the initiator of the transaction, which is the opposite to how the vast majority of payments are processed and is one of the safest options for card-not-present payments.

Mobile banking

Arguably the most popular mobile payment technology is mobile banking. In markets like Sweden and the UK where there has been a concerted efforts by banks and national governments to move towards a truly cashless society, mobile banking has become one of the most used and certainly simplest methods to transferring money between private individuals and as a method for paying bills, especially rent. The big five UK banks - Barclays, HSBC, Santander, Royal Bank of Scotland (RBS) and Lloyds - despite a few hiccups along the way have all developed state-of-the-art applications that offer their customers the ability to make payments, set-up direct debits or standard orders in a matter of seconds. Even though there is a lot more sophisticated mobile payment services and solutions to choose from in the market, the fact that the vast majority have a current account with a major bank means the use of mobile banking has exploded in recent years, as more and more people enjoy the convenience and speed of making payments using these applications.

SMS payments

Digital banks like Orange Bank and Monzo offer users the ability to pay friends or businesses  for products, goods and services by text message. Despite being available across Europe the mobile payment technology that is more commonly referred to as premium SMS has garnered a lot of attention and significant traction in unbanked regions of the world like Africa. Lacking a strong banking infrastructure in the region, premium SMS allows citizens a cheap and affordable alternative payment method that can be easily accessed on a smartphone device - something that people in the region have an abundance of. Therefore, premium SMS is a perfect fit that allows individuals and businesses to transfer money from one mobile phone to another in a fast and relatively secure manner in parts of the world without access to many of the other alternative payment methods on this list. But even in more developed countries like the UK where mobile apps like Barclays Pingit have grown in popularity, the mobile payment technology is a great alternative for person-to-person payments.

Browser-based payments

Last on the list is browser-based payments, which albeit being the least glamorous mobile payment system from a technology perspective is still one of the most common and simplest payments methods around. A lot of users, even with the myriad of mobile payments services and solutions out there to choose from still make payments on their smartphone via their internet browser such as Apple Safari or Google Chrome. Companies like PayPal, Visa and MasterCard all offer online retailers easy to install software that allows them to seamlessly integrate checkout systems that allow customers to enter in their debit or credit card details to order products and services from their browser. With many software providers offering users the option to save their financial information in the browser and third parties creating add-ons that improve the security of payments for browser-based payments, even though this is one of the oldest mobile payment methods around the old adage ‘if it ain’t broke don’t fix it’ rings true.

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