Mobile payments, also known as “m-payment”, “mobile money”, “mobile money transfer”, and “mobile wallet”, are transactions made or received with mobile devices. Simply put, you might use mobile pay in place of cash, check, or credit cards. You might use mobile payments as an alternative to credit cards because it’s more convenient and secure. You see, traditional credit cards store consumers’ information on the merchant’s point-of-sale (POS) terminals, while mobile payments don’t. When utilizing a mobile pay, your mobile device serves as a security token and creates a random code for the transaction, which makes the transaction more secure. In fact, mobile payments have become so popular that the total value of mobile payment transactions is expected to triple to $27 billion in 2016.
Various technologies used for mobile payments include token transmission over the air (OTA) or via manual entry with a keypad. Other mobile pay technologies include Near Field Communication (NFC), Bluetooth, Wi-Fi, and RFI. Companies that provide mobile payment systems include Apple, Android, Google, Samsung, Venmo, PayPal, and Square.
While mobile payment numbers climb steadily, they’re not climbing as quickly as was anticipated three years ago. Fewer than 3% of cell phone owners in the United States used mobile wallets in-store in the first three months of 2015. Yet, 57% of consumers reported being interested in mobile payments technologies. The challenge comes in when attempting to determine whether consumers hesitate using mobile payments, or whether platforms are unprepared for widespread use.
Other challenges with mobile payment involve security. As over-the-air transactions occur, payment applications become vulnerable to hackers looking to misuse customer data. Merchants need to understand how sensitive data is stored and transmitted. With this knowledge, data protection solutions can be implemented accurately.
Companies unprepared for mobile payments can experience sluggish performance if there are inefficient processing limits for capacity. Increasing transaction volumes cause delays which, in turn, frustrate consumers who expect seamless service. Companies also need to prepare to quickly adapt to new mobile payment opportunities to meet rising customer expectations.
Mobile payment benefits include delivering convenience, improving sales, and keeping customers loyal. Rather than stopping at an ATM for cash or loading a wallet or purse with credit cards, you can easily use your smartphones to complete payment transactions. You’ll also enjoy quickly m-paying, because it cuts down on your check-out time.
There are incentive programs attached to mobile payment applications. The application saves your information and logs your payments for loyalty programs which add value to other purchases. The ability to use mobile payments at businesses that didn’t used to accept credit card purchases is a great benefit. In many cases, businesses find mobile payment plans are less expensive than having a credit card payment system. In fact, businesses that once were cash-only will experience a jump in revenue, simply by offering mobile payment options.
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As technology advances and consumer faith increases, the adoption rate for mobile payments is growing. No matter which smartphone you have, give mobile payments a try the next time you shop. Find out whether using a digital wallet is a good fit for you.