Mobile payment is about making purchases with a mobile device. Instead of paying with cash, cheque, or credit cards, a consumer can use a smartphone or tablet to pay for a wide range of goods and services. This is done via applications installed on a mobile device or directly from a web page. The transaction is subject to restrictions and guidelines.
There are five types of mobile payments, and the Mobile wallet is one of them. A mobile wallet is an application on your mobile device that enables you to store virtual versions of items you would normally find in a real wallet.
Users can pay their bills with it, transfer money, store credit card or bank account information, customer loyalty cards, gift cards, coupons, boarding passes or event tickets.
These information may be stored either on the device itself or in the cloud. Just as with real money, it can be used to make instant payments, be it at e-stores or physical ones.
Mobile wallets generally work as follows.
- The user downloads the mobile wallet app (if it’s not already built into his mobile device).
- The user registers and inputs his phone number.
- The provider sends an SMS with a Personal Identification Number (PIN) to the user.
- The user enters the received PIN, authenticating the number
- The user inputs his credit card info or another payment method and validates payment.
For subsequent payments, the user will only have to re-enter his PIN to authenticate and validate payment.
Near Field Communication
Near Field Communication (NFC) is a form of contactless communication that enables two electronic devices to transfer data by bringing them within 4 cm of each other. One of the devices is usually a smartphone or a tablet.
NFC is possibly the most enticing and convenient way to make payments, retrieve information, and even exchange videos with friends on the go. NFC is used mostly in paying for purchases made in physical stores, where a user has only to wave his smartphone over a NFC compatible device to instantly pay for his groceries without having to fumble into his wallet for a debit or credit card. The payment could be deducted from a pre-paid account or charged to a mobile or bank account directly.
Jointly developed by Philips and Sony, NFC works via enabled cards and devices. No pairing code is necessary to link up.
NFC technology can still be used on a smartphone that isn’t compatible as the technology is set to be available on both SIM cards and Micro SD cards soon.
It is much more power-efficient than other wireless communication types, as it uses chips that run on very low amounts of power. Unlike Bluetooth and Wi-Fi which use radio transmissions for communication, NFC uses utilizes electromagnetic radio fields to allow wireless communication and data exchange between digital devices.
To guarantee security, NFC often establishes a secure channel and uses encryption when sending sensitive information such as credit card numbers. It is recommended that users protect their private data by adding a password to their smartphone in the event their phone is stolen or lost.
Some Mobile Payment and Digital Wallet services
Apple Pay is a mobile payment and digital wallet service by Apple Inc. It lets users make payments using the iPhone 5 and later models as well as the iPad Air 2, iPad Pro and iPad Mini 3 and later and Mac. Apple Pay does not require contactless payment terminals specific to it, but it works with existing contactless terminals.
Apple Pay lets mobile devices make payments at contactless points of sale, and also in iOS apps and on the Web. It digitizes (that is, in puts in digital form) and replaces the credit or debit card chip and PIN or magnetic stripe transaction at point-of-sale terminals. The service lets Apple devices wirelessly communicate with point of sale systems using a NFC antenna, a chip that stores encrypted payment information and Apple’s Touch ID and Wallet.
Samsung Pay is a mobile payment and digital wallet service by Samsung Electronics that lets users make payments using compatible phones and other Samsung-produced devices. The service supports contactless payments using NFC. It also incorporates an electromagnetic transmission system that allows contactless payments to be used on payment terminals that only support magnetic stripe cards. The service was launched in 2015.
Google Wallet is a payment service that allows people to send and receive money from a mobile device or desktop computer, at no cost to either sender or receiver. Developed by Google, Google Wallet can be used through the Google Wallet app, Gmail and the Google Wallet Card. The app is available for Android devices running Android 4.0 and above, and for iOS devices running iOS 7.0 and above. It depends on NFC hardware as well.
Alipay is a third-party online payment platform with no transaction fees. It was launched in China in 2004 by Alibaba Group. Alipay provides an escrow service, which enables consumers to verify whether they are happy with the goods they have bought before releasing money to the seller. This service was offered to compensate for China’s weak consumer protection laws, which had reduced consumer confidence. Alipay operates with over 50 financial institutions including Visa and Mastercard.
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