It’s not so long ago that we used to use our mobile phones to call people, send text messages and play pixelated games (who remembers snakes!?)
But today, our smartphones have evolved to encompass maps, entertainment centers, news portals, fitness trainers, and so much more. We’re even using them to make mobile payments — at online and physical stores as well as peer-to-peer.
Let’s take a look at this emerging market and explore the different types of mobile payments in use in 2021.
A mobile wallet, eWallet or digital wallet usually operates via a mobile app. They provide a way to store funds, make payments, and access payment history. Mobile wallets can utilize NFC technology or QR codes to allow consumers to make fast, contactless payments using their smartphones.
Big names in the mobile wallet market include Google Pay, Samsung Pay and Apple Pay. Using secure technology, they operate like a virtual card, allowing users to pay at contactless card terminals, make online and in-app purchases, transfer money to other users, and even withdraw cash at ATMs. Fingerprint authentication and complex encryption help keep these transactions secure.
As a growing market, we’re constantly seeing mobile wallets innovate to expand their features. Users can now hold virtual gift cards, link their loyalty card accounts, and even store important documents like travel tickets using a digital wallet on their mobile device.
QR code payments
Quick response (QR) codes are all over the place, from product packaging to public space advertising. A quick scan allows consumers to easily access information — no need to manually type a URL or other details.
QR codes have been circulating in this way for a while, but they are now being used more widely to enable mobile payments through banking apps and mobile wallets.
To make a cashless transaction in this way, a shopper simply needs to open their app and scan the code provided by the retailer. After verifying the payment amount, they just scan their fingerprint or enter a PIN to complete the transaction.
Some merchants are even using this technology on their websites, as an alternative to capturing card details manually. This can feel more secure for online shoppers since they are not writing out their card details anywhere. It also reduces the risk of credit card fraud for the retailer.
Another way for merchants to easily accept payments online is via a payment link. This is simply a button or textlink, usually saying ‘Pay Now’ or ‘Continue to Payment’, which takes the consumer to a secure checkout portal where they can choose their preferred payment method and enter their details. Once completed, the funds are sent to the merchant.
Payment links are a useful way to collect payments when communication is being conducted via email, social media or messaging service. Merchants may specify the amount to be paid, or leave it blank for the customer to fill in themselves. There is also the option to itemize the bill, if applicable.
While these are widely used by merchants selling goods or offering services online, they can also be helpful in face-to-face transactions where there is no PoS terminal available. Simply message the buyer with a link, and they can make a mobile payment right then and there.
Also known as premium SMS, this is a way to pay for goods or services or make a charitable donation via your mobile phone bill. SMS payments require the user to send a text message containing certain information to a particular phone number. The payment amount is either deducted from their pay-as-you-go credit or added to their monthly phone bill.
Before the rise of mobile banking and digital wallets, SMS payments were a very popular way to carry out small transactions, whether paying for goods, donating to charity or registering for a service. They remain a robust and simple way to make mobile payments without the need for an internet connection, but with more advanced and refined technologies emerging, the premium SMS market is shrinking.
The bottom line
All of these types of mobile payment have their place in today’s market, but some are on the way out while others are just getting started.
However you conduct your business, it’s key to offer payment methods that allow your customers to transact when and how it suits them.