Most of the money in the world does not exist in cash form but rather in electronic form.  With new technological advancements across digital mobile payment systems expected to disrupt large & small merchants.  As mobile devices continue to evolve, so do mobile payment systems.

Current Payment Systems vs. Mobile Payment Systems- Which is better?

Currently, the most widely accepted payment methods are cash; checks, debit/credit cards and online systems like Paypal serve the consumers. There are new payment options like P2P services, ISIS, Google Wallet and Level Up, but none seem to be catching on.

There’s been little innovation in this area and we continue to debate fees and who actually benefits –consumer, merchants or financial institutions? So, with little innovation with current payment systems, mobile is expected to benefit both merchants & consumers. But how?

How Mobile Payment Systems Will Evolve

Will Mobile payment systems eliminate the disadvantages of the current forms of payment? Consumers and business owners will benefit as transaction processing time will decrease and hardware requirements are expected to fall in price.  Like anything new, change won’t happen overnight and anytime hardware & software changes are involved, adoption slows.  Security continues to be a question mark, but I’d point to Starbucks successful loyalty program that powers its mobile-payment app.

What it takes

The hardware and regulatory requirements for mobile payment systems are different due to the fact that there are many different systems. In the B2C set up, most systems only require you to have computers that have real time management systems which are linked to your respective business accounts. Consumers on the other hand, are required to have their mobile phones and additional identification techniques to prevent fraud.  And one big fraud will delay growth for sure.
Types of Mobile Payment Systems

  • SMS: The transactions are carried out with confirmations via USSD or SMS messages. The premium charges are applied on the phone bills of your consumers once they send the transaction SMSs.
  • Web based: These are mobile payment systems which are applied on the mobile internet. They use various systems to facilitate efficient and convenient transactions between businesses and consumers.
  • Direct Mobile Billing: Instead of the regular credit cards, consumers will have the option of mobile billing within an ecommerce site. Once the payment is approved, the relevant funds are deducted from their mobile accounts. (My personal favorite!)
  • Near field Communication: This system usually occurs during physical transactions. Consumers need to have special mobile phones equipped with a smartcards. Once this mobile phone is passed through a special POS terminal, the relevant funds are deducted from the consumer’s account or charged to a credit account

Major Players in the Mobile Payments Industry

Some of the big names in the mobile payments industry include:

  • Google wallet: Allows consumers to save their credit cards, vouchers, gift cards, etc within their mobile phones to be used in Near Field Communication.
  • Apple Passport: This is an iOS 6 app which integrates various transactional aspects like credit cards, vouchers, gift cards, etc within it. This in turn allows consumers to use their iPhones, iPods and iPads for transactions, without having to carry credit cards and other transactional elements. There are mobile payments happening in the Apple Store every day.
  • Square: Allows for acceptance of credit card payments anywhere through iPhone, Android or iPads.
  • Paypal Here: Similar to Square, allows for acceptance of credit card payments anywhere through iPhone and Android.  It also allows you to scan the cards, checks and vouchers using a regular phone camera. It also comes with a card reader for reading and authenticating credit cards.
  • Intuit GoPayment: This is an app that allows you to be paid to your mobile phone accounts via credit cards.
  • Amazon Payments: This is a system owned by Amazon. It allows consumers to carry out transactions on any website using the transaction options available on Amazon.

Future of mobile payments

Mobile payments are expected to fully revolutionize commerce in the near future. For this to be effectually implemented, major mobile payment industries must work together to allow efficient transfer of payments between their accounts. Mobile payment systems will eventually develop further with the future of commerce directly determined by the use and advancement of mobile payments.

What are your thoughts? Please enter your comments in the box below.

Steven Kietz, EVP and General Manager, Strategic Partnerships

Steve leads efforts with Financial Institutions and other major partners at edō. Steve is focused on working with leading financial institutions and channel partners to deliver valuable targeted offers to their customers using the latest technology.

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