The desktop vs. mobile discussion is one of the most relevant in our current times. However, being able to pay for goods and services, all from your mobile phone, from any location you are in, seems to settle this matter. According to Mobile Payment Market Report, people are becoming more and more comfortable finalizing their transactions with mobile phones. Convenience and time are the two factors that influence customers preferences. In addition, the mobile payment market is projected to grow at an annual rate of 33% between 2019 and 2026, reaching $457 billion in 2026.
Mobile wallet - any idea where it all started?
In 1997, Coca-Cola introduced the first mobile purchasing vending machines. Customers could send a text message to a selected vending machine to purchase their drinks. Mobile banking first appeared in the same year through Merita Bank. It allowed customers to send text messages to process bank account transactions.
Digital wallet - the technology behind it
There are several widely used types of payment technologies on the market, so let’s visit a few of them below:
First, mobile payments can be conveniently carried out using Near Field Communication, in short known as NFC. It is a contactless remote technology working up to 4 inches between mobile and PoS devices. NFC-enabled devices work based on a radio frequency current that can be captured by machines compatible with NFC to read and process payments. No other authentication measures are required. That makes this technology so convenient and attractive in terms of speed. A simple NFC tap from a mobile device can solve problems at the checkout with a blink of an eye. The only disadvantage is the necessity of an extra piece of electronic hardware that needs to be integrated into devices for NFC to work.
Another interesting technology is sound wave payment. It is based on an encoding algorithm that turns encrypted payment data into sound waves that do not need to rely on the idiosyncrasies of the physical environment (it can be transmitted without the Internet). The receiving application on a smartphone has to decode the audio and translate it using the same algorithm. Unlike NFC, there is no need for specific electronic hardware but only software that allows for the decryption of the algorithms.
Quick Response (QR) Code is also one of the acceptable forms of contactless payments. It is the square-shaped older brother of the two-dimensional barcode. A QR code consists of black squares arranged in a square grid on a white background. The grid can be read by an imaging device such as a camera and the required data can be extracted from patterns of the image. In terms of the financial market, QR codes have wide application including bill payments and peer-to-peer or peer-to-merchants transfers.
See also: Mobile Development Solutions
As the convenience and ease of use of mobile payments continue to appeal to users, it is worth to take a closer look at the major players. Used for a smoother checkout experience and higher conversion rate, the three most established systems are Apple Pay, Samsung Pay and Google Pay.
Apple Pay is a mobile payment and digital wallet service by Apple Inc. that allows users to make payments in person, in iOS apps, and on the web. It is supported on the iPhone, Apple Watch, iPad and Mac. It is available (as of June 19, 2019) in 37 countries with an additional 14 countries joining soon. Users of iPhones and iPads authenticate by holding their fingerprint to the phone’s Touch ID sensor or facial recognition via Face ID, whereas Apple Watch users authenticate by double-clicking a button. The service lets Apple devices wirelessly communicate with point of sale systems by using NFC.
Samsung Pay is a mobile payment service introduced by Samsung Electronics that lets the users make payments using Samsung devices. Available on Samsung Galaxy phones beginning with the Galaxy Note 5 and Gear Watches. Similar to Apple Pay, Samsung supports contactless payments using NFC. Furthermore, it also supports magnetic stripe or EMV payment terminals and in-app purchases. Samsung Pay is supported in 25 countries and has amassed 14 million users in South Korea alone. With Samsung Pay, each transaction is additionally authenticated by fingerprint, PIN or iris scan.
Google Pay, formerly Android Pay, is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices. Available in 31 countries on Android phones, tablets or watches with NFC and HCE support running Lollipop 5.0 or higher and on Apple phones running iOS 7 and above. When you use your phone to pay in stores, Google Pay shares an encrypted number instead of your actual card number, so your account details stay secure. You may be asked to set up a screen lock on your Android device. Google Pay works with PIN, pattern, password, fingerprint, or retina scanning screen locks.
Why is it worth to go cashless?
It is no surprise that convenience is the first advantage of going cashless. You no longer need to carry cash, plastic cards, and even your wallet when having mobile payments set up on your favorite device. It’s also easier to track spendings. With all of the transactions recorded, it is very easy to keep track of everything and analyze spending. This leads to overall better budgeting. It’s also safe to use as every transaction is authenticated with biometric IDs such as fingerprint, iris or facial recognition. When stolen, the mobile wallet can be easily blocked remotely. As a bonus, many banks and merchants offer special discounts for digital purchases.
Mobile devices link the offline world with the online, enabling mobile banking offering innovative features that are available exclusively to smartphone users. The mobile payment sector is expected to grow as a result of the benefits provided. Furthermore, there is growing customer demand for smartwatches that also adopted cashless transactions and have contributed to the wearable payment market. Considering all of forms of digital payments, are you ready to say goodbye to your physical cards?