Mobile payments are a payment method using a digital device like a smartphone or tablet to make purchases. They can be made in-store, online or through peer-to-peer (P2P) transfers.
They also eliminate the need for a physical wallet. This makes them more convenient for customers and safer. In addition, they offer a quicker checkout process and less of a chance for a customer to abandon their cart.
1. NFC
NFC is a type of mobile payment system that allows customers to make contactless payments using their smartphones or tablets. It works by allowing a customer’s device and point-of-sale (POS) terminal to talk to each other via a secure, low-speed wireless connection.
NFC uses two-way encryption to protect card information, which is transmitted from the device to the POS reader in a way that is difficult for hackers to intercept. In addition, NFC mobile payments require users to authorize their transactions by displaying a biometric such as face ID or fingerprints, or using multi-factor authentication like a passcode.
Businesses that accept NFC mobile payments include brick-and-mortar retailers, street vendors and food trucks, as well as online stores that want to offer in-person sales. Additionally, medical and dental offices, therapists and other service providers that handle carryout payments often accept this technology as well.
Although NFC mobile payments are a relatively new technology, they’re growing in popularity. In fact, they were used for more than a quarter of all point-of-sale transactions in 2020 and are forecast to grow to a third by 2023.
2. MST
MST, or magnetic secure transmission, is a contactless payment method that mimics the magstripe terminals that are still used by many credit card readers. Basically, Samsung phones and Gear smartwatches emit a magnetic signal that imitates the credit card’s magnetic strip and card terminals pick it up and process the payment as if a physical card had been swiped through the machine.
It’s a lot easier to use than NFC because it doesn’t require retailers to upgrade their card terminals. Plus, it’s safer than using NFC because it uses advanced tokenization during the transaction to keep your data safe.
However, it’s not the best choice for public transit riders because you can’t store ID cards or public transit passes in your phone. But, it’s a good option for people who want to pay for purchases without carrying a physical credit or debit card around.
MST is a secure mobile payment technology that works with most NFC-ready POS terminals that accept contactless payments. It’s also available on all of the latest Samsung phones and Gear smartwatches, allowing users to use it at more locations than NFC.
3. Mobile Wallets
Mobile Wallets are apps that store payment card information on your phone and enable contactless payments at merchants that accept the service. They also allow customers to store loyalty club memberships and other reward cards and are often safer than carrying physical cards around.
They are available on iPhones and Android phones, and can be downloaded from the Apple App Store or Google Play. They rely on near-field communication (NFC) technology to interact with mobile wallet ready payment terminals.
Typically, when making a purchase, you pull out your smartphone, unlock it, hold it next to the pay terminal and approve by tapping on the screen or using your fingerprint or face scan. The process usually takes a couple of seconds.
Another benefit of this type of payment is that it’s faster than traditional debit and credit cards. Since you don’t need to enter a PIN or give your signature before the transaction is complete, you save time and money.
In addition, since the data on your mobile wallet is encrypted, there’s less risk of identity theft. Instead of sending the actual account or card numbers to the merchant, your mobile wallet uses a Device Account Number (DAN) that is completely useless to anyone but you.
Despite these benefits, mobile wallets are still not widely accepted at all retailers. However, they are likely to grow rapidly over the coming years and could eventually replace debit cards entirely.