| E-commerce |
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| Digital content |
| Retail goods and services |
| Online shopping |
| Mobile commerce |
| Customer service |
| E-procurement |
| Purchase-to-pay |
| Super-apps |
Mobile payment, also referred to asmobile money,mobile money transfer andmobile wallet, is any of variouspayment processing services operated underfinancial regulations and performed from or via a mobile device. Instead of paying withcash,cheque, orcredit card, a consumer can use apayment app on a mobile device to pay for a wide range of services and digital or hard goods. Although the concept of using non-coin-based currency systems has a long history,[1] it is only in the 21st century that the technology to support such systems has become widely available.
Mobile payments were adopted inJapan in the 2000s and later all over the world in different ways.[2][3] The firstpatent exclusively defined "Mobile Payment System" was filed in 2000.[4]
In adeveloping country, mobile payment solutions can be deployed as a means of extending services offinancial institutions to the community known as the "unbanked" or "underbanked", which is estimated to be as much as 50 percent of the world's adult population, according to the Financial Access 2009 Report "Half the World is Unbanked".[5] Such payment networks are often used formicropayments.[6] The use of mobile payments in developing countries has attracted public and private funding by organizations such as theBill & Melinda Gates Foundation, theUnited States Agency for International Development, andMercy Corps.[citation needed]
Mobile payments are becoming a key instrument forpayment service providers (PSPs) and other market participants, in order to achieve new growth opportunities, according to theEuropean Payments Council (EPC).[7] The EPC states that "new technology solutions provide a direct improvement to the operations efficiency, ultimately resulting in cost savings and in an increase in business volume".
There are four primary models for mobile payments:[8]
In models connected to a bank or operator, abank/operator is the central node of the model, manages the transactions and distributes the property rights. In collaborative model, the financial intermediaries and telephonic operators collaborate in the managing tasks and share cooperatively the proprietary rights. In ISP model, a third party of confidence operates as an independent and "neutral" intermediary between financialagents and operators.Apple Pay orPayPal are the providers the most frequently associated to this model.[citation needed]
There can also be combinations of two models.
Financial institutions andcredit card companies[10] as well as Internet companies such asGoogle[11] and a number ofmobile communication companies, such asmobile network operators and majortelecommunications infrastructure such as w-HA from Orange and smartphonemultinationals such asEricsson[12][13] andBlackBerry have implemented mobile payment solutions.
A mobile wallet is anapp that contains the user's debit and credit card information, letting the user pay for goods and services digitally with a mobile device.[14] Notable mobile wallets include:
A simple mobile web payment system can also include a credit card payment flow allowing a consumer to enter their card details to make purchases. This process is familiar but any entry of details on a mobile phone is known to reduce the success rate (conversion) of payments.
In addition, if the payment vendor can automatically and securely identify customers then card details can be recalled for future purchases turning credit card payments into simple single click-to-buy giving higher conversion rates for additional purchases.
However, there are concerns regarding information and payment privacy when cards are used during online transactions. If a website is not secure, for example, then personal credit card info can leak online.
The consumer uses the mobile billing option during checkout at an e-commerce site—such as an online gaming site—to make a payment. Aftertwo-factor authentication involving the consumer's mobile number and a PIN orone-time password (often abbreviated asOTP), the consumer's mobile account is charged for the purchase. It is a true alternative payment method that does not require the use of credit/debit cards or pre-registration at anonline payment solution such asPayPal, thus bypassing banks and credit card companies altogether. This type of mobile payment method, which is prevalent in Asia,[citation needed] provides the following benefits:
Even as the volume of Premium SMS transactions have flattened, many cloud-based payment systems continue to use SMS for presentment, authorization, and authentication,[16] while the payment itself is processed through existing payment networks such as credit and debit card networks. These solutions combine the ubiquity of the SMS channel,[17] with the security and reliability of existing payment infrastructure. Since SMS lacksend-to-end encryption, such solutions employ a higher-level security strategies known as 'tokenization' and 'target removal'[18] whereby payment occurs without transmitting any sensitive account details, username, password, or PIN.
Point-of-sales mobile payment solutions have not relied on SMS-based authentication as a payment mechanism, but remote payments such as bill payments,[19] seat upgrades on flights,[20] and membership or subscription renewals are commonplace.
In comparison to premium short code programs which often exist in isolation,relationship marketing and payment systems are often integrated withCRM,ERP,marketing-automation platforms, andreservation systems. Many of the problems inherent with premium SMS have been addressed by solution providers. Remembering keywords is not required sincesessions are initiated by the enterprise to establish a transaction specific context. Reply messages are linked to the proper session and authenticated either synchronously through a very short expiry period (every reply is assumed to be to the last message sent) or by tracking session according to varying reply addresses and/or reply options.[21]
Direct operator billing, also known as mobile content billing,WAP billing, and carrier billing, requires integration with the mobile network operator. It provides certain benefits:
One of the drawbacks is that the payout rate will often be much lower than with other mobile payments options. Examples from a popular provider:
More recently, direct operator billing is being deployed in an in-app environment, where mobile application developers are taking advantage of the one-click payment option that direct operator billing provides for monetising mobile applications. This is a logical alternative to credit card and Premium SMS billing.
In 2012 Ericsson andWestern Union partnered to expand the direct operator billing market, making it possible for mobile operators to include Western Union mobile money transfers as part of their mobile financial service offerings.[23] Given the international reach of both companies, the partnership is meant to accelerate the interconnection between the m-commerce market and the existing financial world.[24]
 | This section needs to beupdated. The reason given is: missing contemporary adoption status. Please help update this article to reflect recent events or newly available information.(May 2024) |
Near-field communication (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer using a special mobile phone equipped with a smartcard waves their phone near a reader module. Most transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from a pre-paid account or charged to a mobile or bank account directly.
Mobile payment method via NFC faces significant challenges for wide and fast adoption, due to lack of supporting infrastructure, complex ecosystem of stakeholders, and standards.[25] Some phone manufacturers and banks, however, are enthusiastic. Ericsson and Aconite are examples of businesses that make it possible for banks to create consumer mobile payment applications that take advantage of NFC technology.[26]
NFC vendors in Japan are closely related to mass-transit networks, like theMobile Suica used since 28 January 2006 on theJR East rail network. The mobile walletOsaifu-Keitai system, used since 2004 for Mobile Suica and many others includingEdy andnanaco, has become thede facto standard method for mobile payments inJapan. Its core technology, Mobile FeliCa IC, is partially owned bySony,NTT DoCoMo and JR East. Mobile FeliCa utilize Sony'sFeliCa technology, which itself is the de facto standard forcontactless smart cards in the country. NFC was used in transports for the first time in the world byChina Unicom and Yucheng Transportation Card in the tramways and bus ofChongqing on 19 January 2009,[27] in those ofNice on 21 May 2010,[28] then inSeoul[29] after its introduction in Korea by the discount retailerHomeplus in March 2010[30] and it was tested then adopted or added to the existing systems inTokyo from May 2010 to end of 2012.[31][32] After an experimentation in the metro ofRennes in 2007, the NFC standard was implemented for the first time in a metro network, by China Unicom inBeijing on 31 December 2010.[33]
Other NFC vendors mostly in Europe usecontactless payment over mobile phones to pay for on- and off-street parking in specially demarcated areas. Parking wardens may enforce the parking by license plate, transponder tags, orbarcode stickers.
In Europe, the first experimentations of mobile payment took place in Germany during 6 months, from May 2005, with a deferred payment at the end of each month on the tramways and bus ofHanau with theNokia 3220 using the NFC standard ofPhilips andSony.[34]
In France the immediate contactless payment was experimented during 6 months, from October 2005, in some Cofinoga shops (Galeries Lafayette,Monoprix) andVinci parkings ofCaen with aSamsung NFCsmartphone provided byOrange in collaboration withPhilips Semiconductors (for the first time, thanks to "Fly Tag", the system allowed to receive as well audiovisual informations, like bus timetables or cinema trailers from the concerned services).[35][36] From 19 November 2007 to 2009, this experimentation was extended in Caen to more services and three additionalmobile phone operators (Bouygues Telecom,SFR andNRJ Mobile) and inStrasbourg[36] and on 5 November 2007, Orange and the transport societiesSNCF andKeolis associated themselves for a 2 months experimentation on smartphones in the metro, bus and TER trains inRennes.[37][36] After a test conducted from October 2005 to November 2006 with 27 users,[38] on 21 May 2010, the transport authority ofNiceRégie Lignes d'Azur was the first public transport provider in Europe to add definitely to its own offer a contactless payment on its tramways and bus network either with aNFCbank card orsmartphone application notably onSamsung Player One (with the same mobile phone operators than in Caen and Strasbourg), as well as the validation aboard with them of the transport titles and the loading of these titles onto the smartphone, in addition to the season tickets contactless card.[39][28] This service was as well experimented then respectively implemented for NFC smartphones on 18 and 25 June 2013 in the tramways and bus ofCaen[40][41] and Strasbourg.[42][43] InParis transport network, after a 4 months testing from November 2006 with Bouygues Telecom and 43 persons[38] and finally with 8,000 users from July 2018, the contactless mobile payment and direct validation on the turnstile readers with a smartphone was adopted on 25 September 2019[44][45][46] in collaboration with the societies Orange, Samsung, Wizway Solutions, Worldline and Conduent.
Other vendors use a combination of both NFC and a barcode on the mobile device for mobile payment, because many mobile devices in the market do not yet support NFC.[47]
QR code is a square two-dimensional bar code. QR codes have been in use since 1994.[48] Originally used to track products in warehouses, QR codes were designed to replace the older one-dimensional bar codes. The older bar codes just represent numbers, which can be looked up in a database and translated into something meaningful. QR, or "quick response", bar codes were designed to contain the meaningful information directly in the bar code.
QR codes can be of two main categories:[49][50][citation needed]
Mobile self-checkout allows for one to scan a QR code or barcode of a product inside a brick-and-mortar establishment in order to purchase the product on the spot. This theoretically eliminates or reduces the incidence of long checkout lines, even at self-checkout kiosks.
Google, PayPal, GlobalPay andGoPago use acloud-based approach to in-store mobile payment. The cloud based approach places the mobile payment provider in the middle of the transaction, which involves two separate steps. First, a cloud-linked payment method is selected and payment is authorized via NFC or an alternative method. During this step, the payment provider automatically covers the cost of the purchase with issuer linked funds. Second, in a separate transaction, the payment provider charges the purchaser's selected, cloud-linked account in a card-not-present environment to recoup its losses on the first transaction.[51][52][53]
The audio channel of the mobile phone is another wireless interface that is used to make payments. Several companies have created technology to use the acoustic features of cell phones to support mobile payments and other applications that are not chip-based. The technologies likenear sound data transfer (NSDT), data over voice andNFC 2.0 produce audio signatures that the microphone of the cell phone can pick up to enable electronic transactions.[54]
In the T-Cash[55] model, the mobile phone and the phone carrier is the front-end interface to the consumers. The consumer can purchase goods, transfer money to a peer, cash out, and cash in.[56] A 'mini wallet' account can be opened as simply as entering *700# on the mobile phone,[57] presumably by depositing money at a participating local merchant and the mobile phone number. Presumably, other transactions are similarly accomplished by entering special codes and the phone number of the other party on the consumer's mobile phone.
In Switzerland,TWINT offers the same function.[58]
Inmagnetic secure transmission (MST), a smartphone emits a magnetic signal that resembles the one created by swiping a magnetic credit card through a traditionalcredit card terminal. No changes to the terminal or a new terminal are required.
Swish is the name of a system established inSweden.[59] It was established through a collaboration from major banks in 2012 and has been very successful, with 66 percent of the population as users in 2017.[60] It is mainly used forpeer-to-peer payments between private people, but is also used by churches, street vendors, and small businesses. A person's account is tied to his or her phone number and the connection between the phone number and the actual bank account number is registered in the internet bank. Theelectronic identification systemmobile BankID, issued by several Swedish banks, is used to verify the payment. Users with a simple phone or without the app can still receive money if the phone number is registered in the internet bank. Like many other mobile payment system, its main obstacle is getting people to register and download the app, but it has managed to reach acritical mass and it has become part of everyday life for many Swedes.
Swedish payments companyTrustly also enables mobile bank transfers, but is used mainly for business-to-consumer transactions that occur solely online. If an e-tailer integrates with Trustly, its customers can pay directly from their bank account. Unlike Swish, users don't need to register a Trustly account or download software to pay with it.
The DanishMobilePay and NorwegianVipps are also popular in their countries. They use direct and instant bank transfers, but also for users not connected to a participating bank, credit card billing.
In India a new direct bank transfer system has emerged called asUnified Payments Interface. This system enables users to transfer money to other users and businesses in real-time directly from their bank accounts. Users download UPI supporting app from app stores on their Android or iOS device, link and verify their mobile number with the bank account by sending one outgoing SMS to app provider, create a virtual payment address (VPA) which auto generates a QR code and then set a banking PIN by generating OTP for secure transactions. VPA and QR codes are to ensure easy to use & privacy which can help inpeer-to-peer (P2P) transactions without giving any user details. Fund transfer can then be initiated to other users or businesses. Settlement of funds happen in real-time, i.e. money is debited from payer's bank account and credited in recipient's bank account in real-time. UPI service works 24x7, including weekends and holidays. This is slowly becoming a very popular service in India and is processing monthly payments worth approximately $10 billion as in October 2018.[61]
In Poland theBlik mobile payment system was established in February 2015 by the Polish Payment Standard (PSP) company. To pay with Blik, you need a smartphone, a personal account and a mobile application of one of the banks that cooperate with it. The principle of operation is to generate a 6-digit code in the bank's mobile application. The Blik code is used only to connect the parties to the transaction. It is an identifier that associates the user and a specific bank at a given moment. For two minutes, it points to a specific mobile application to which - through a string of numbers - a request to accept a transaction in a specific store orATM is sent. Blik allows you to pay in online and stationary stores. By the Blik, we can also make transfers to the phone or withdraw money from ATMs.[62]
{{cite journal}}:Cite journal requires|journal= (help)| Mobile networks, protocols |
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