Mobile payment

Mobile payment, also called mobile money, mobile money transfer, and mobile wallet, is a way to pay for things using a mobile device. Instead of using cash, a cheque, or a credit card, people can use a special app on their phone to buy all sorts of things, like food, clothes, and online services.

The idea of paying without using coins or paper money is not new, but it was only in the 2000s that we had the technology to make it easy and common. Japan was one of the first places to start using mobile payments, and now many countries around the world do too. The first patent for a "Mobile Payment System" was filed in the year 2000.

Mobile payments are especially important in places where many people do not have banks or easy access to money services. These payments help connect people to financial services, including small payments that are hard to handle with traditional money methods. Organizations like the Bill & Melinda Gates Foundation, the United States Agency for International Development, and Mercy Corps support these efforts to make sure everyone can use money more easily.

Models

There are four main ways mobile payments can work. A bank or phone company can lead the process, handling transactions. Sometimes they work together. Other times, a neutral third party helps, like Apple Pay or PayPal.

Different companies, like Google, banks, and credit card companies, have created their own mobile payment systems. Some team up, like in Haiti.

Mobile wallets

Main article: Online wallet

A mobile wallet is an app that keeps your payment card details. It lets you buy things using your phone instead of cash or cards. Popular mobile wallets make it simple to pay for many items and services with just a tap.

Credit card

A simple mobile web payment system can let a person use their credit card to make purchases. Entering details on a mobile phone can sometimes make payments less successful.

If a payment system can recognize customers safely, it can remember their card details for future purchases. This makes buying things quicker and easier.

However, there are worries about keeping information safe when using cards online. If a website isn’t secure, personal credit card details might accidentally become visible online.

Carrier billing

When someone shops online, like on a gaming site, they can use their mobile phone to pay. They just need to enter a special code linked to their phone number. This way, they don’t need to use a credit card or sign up for extra services. It’s quick and easy.

This payment method is popular in some parts of Asia. It’s fast—most payments happen in less than 10 seconds. It’s also simple because there’s no need to sign up for new apps or services. Plus, it’s secure because it uses two ways to confirm the payment.

Contactless near-field communication

Near-field communication (NFC) is used for paying in stores or on buses and trains. People with special phones can tap their phone on a reader to pay. Sometimes they need to enter a code. The money comes from an account or a bank account.

NFC for mobile payments has had some problems because not all places have the right equipment. But some companies and banks are excited about it. In Japan, systems like Mobile Suica have been used since 2006 on trains, and Osaifu-Keitai is a popular way to pay for many things. NFC has also been used in cities like Chongqing, Nice, Seoul, and Tokyo for public transport. In Europe, tests started in places like Hanau and Caen, and now more cities like Paris offer mobile payments on buses and trains. Some systems also use a barcode along with NFC because not all phones have NFC.

Other mobile payment methods

QR code payments

Main article: QR code payment

A QR code is a special barcode that can be scanned to share information fast. People use QR codes to pay for things. One person shows the QR code on their phone, and another person scans it to finish the payment.

Cloud-based mobile payments

Companies like Google, PayPal, and GoPago use a system where a payment service helps finish the transaction. First, the payment is approved, and then the service collects the money from the person's account later.

Audio signal-based payments

Some mobile phones can make payments using sound. Special technology lets a phone send payment information through audio signals.

Direct carrier and bank co-operation

In some places, like with the T-Cash model, people can make payments using just their mobile phone and special codes. In Switzerland, TWINT works in a similar way.

Magnetic secure transmission

Main article: Magnetic secure transmission

Magnetic secure transmission lets a smartphone act like a credit card. The phone sends a signal that works with regular card readers, so no new equipment is needed.

Bank transfer systems

Swish is a payment system used in Sweden. It lets people send money directly from their bank accounts using their phone numbers. Other countries have similar systems, like MobilePay in Denmark and Vipps in Norway.

In India, the Unified Payments Interface (UPI) lets people send money in real time. Users link their bank accounts to an app and can transfer money quickly and easily. In Poland, the Blik system works by generating a special 6-digit code to complete payments.