Mobile Payment Systems Overview: Types, Benefits, and Integration

Smartphones and tablets are the mobile devices that the majority of consumers have at hand at all times, making them even more convenient to use for payment than a credit card or cash. Thus, no matter if you sell your goods or services online or in-store, integrating a way to pay via mobile in addition to traditional credit card processing methods is vital for offering a smooth shopping experience for your clients.

Mobile payment systems allow business owners to better connect with customers, secure sensitive data, and increase revenues. Continue reading to find out how your company can implement mobile payments alongside card transactions and reap all the benefits they provide.

What Are Mobile Payment Systems?

Mobile payment systems are services that enable consumers to make purchases via Apple or Android smartphones, tablets, or wearable devices using all major credit, debit, and gift card networks, alongside bank account information. Due to their universality, mobile payments are steadily strengthening their global presence and are driving growth in the non-cash transactions field.

Types of Mobile Payments

Mobile payments come in a variety of forms:

• Browser-based payments. Consumers can simply enter their payment details into a checkout form on a mobile version of a website or an app.
• Mobile wallets. Any near-field communication-enabled (NFC) mobile device can become a secure virtual wallet for storing payment information, coupons, and loyalty rewards. Mobile wallet apps, such as Samsung Pay, Google Pay, and Apple Pay enable users to make both in-store and eCommerce payments.
• SMS payments. You can enable your clients to pay for purchases via SMS. All they will have to do is send a message to a specified number. When the transaction is cleared, the sum will be added to the consumer’s phone bill.
• mPOS. Merchants can turn an assigned smartphone or tablet into a powerful point-of-sale system.
• Mobile P2P. Peer-to-peer payment apps, such as PayPal, Zelle, Venmo, or Cash App, make the mobile purchase process simple and fast for shoppers.

Now, let’s take a look at how these methods enabling consumers to pay through mobile operate to see if it’s convenient for a business to introduce them into their operation alongside card transactions.

How Mobile Payment Systems Works

The operating principle of a mobile payment system depends on its type. The main solutions powering mobile payments are:

• NFC. If your clients are using a mobile wallet, they can simply hold their device over a terminal to complete a payment. The NFC technology embedded in the phone and the terminal enables them to exchange encrypted payment information via radio-frequency identification (RFID).
• Network tokens. This method is made possible by mobile payment tokenization and is useful for storing and processing the consumers’ payment information. Network tokens enable businesses to avoid dealing with sensitive data and lower the risks of a data security breach.
• QR codes. These are secure tools used to exchange encrypted payment data. It is a convenient method for both merchants and customers, as a quick scan of the QR code is enough to conduct a transaction.
• Virtual terminals. If you are a merchant in need of integrating an mPOS system, you have to install an app- or web-based virtual terminal on your device. Simple as that - the mPOS is ready for use.

As you can see, mobile methods open plenty of payment channels in comparison to card transactions. Besides, there are many ways for businesses to enable mobile payments, but is it worth the effort?

Benefits of Mobile Payment Systems

Still haven’t made up your mind on whether or not you should implement mobile payment systems in your business operations instead of having your customers pay only through traditional card transactions? Here is a list of the benefits they offer to help you decide:

• Improved customer satisfaction. Mobile payment systems allow for a smooth payment process and contribute to an overall positive shopping experience.
• Boosted convenience. Fast and flexible transactions that can be conducted from anywhere in the world as long as the shopper has their device with them is extremely convenient.
• High security level. Mobile payments often use advanced data protection and authorization features, such as multi-factor authentication, biometrics, and tokenization.
• Increased retention rate and consumer loyalty. When clients enjoy their shopping experience and feel that their funds and sensitive data are secure, they are highly likely to return to the merchant who provided such exceptional service.
• Amplified revenue. The use of mobile payment systems is predicted to keep growing with time. For instance, NFC payments alone are forecasted to reach 1.31 billion users worldwide in 2023, compared to 950 million users in 2019. Hence, companies that manage to stay on top of this trend can expect an increase in revenues.

The Future of Mobile Payments

Experts are certain that there’s a bright future awaiting mobile payments. It is forecasted that by 2024 there will be 4 billion mobile wallet users in comparison with today’s 2.3 billion. Thus, it is no wonder that this transaction type will be experiencing plenty of innovation. Below are the top five trends we are likely to see mobile payments follow in the near future.

1. Faster Utility and Service Payments

It’s most likely that you get charged for your utility bills through regular credit card payments. Thus, to pay for electricity, water, or gas, you have to access your bank account and initiate the transaction.

However, in the future, mobile payment APIs are aiming to enable companies to implement a plug-and-play solution that will integrate an entire local ecosystem of utility service providers via just one endpoint.

An example of this is already seen in China, where the WeChat app hosts thousands of lightweight APIs and empowers over a billion users to make everyday payments comfortably from a mobile phone.

There’s no doubt that such convenient real-time payments will be welcomed worldwide, enabling people to save time and avoid long queues at municipal institutions like the Department of Motor Vehicles. Besides, this opens plenty of business prospects for companies that deal with invoicing.

2. Simplified Cross-Border Trade

Even nowadays, the majority of cross-border payments remain expensive and fairly slow.

Mobile payments can make this process easier for cross-border trade by facilitating faster international payments and remittances from the comfort of a digital wallet.

This would not only provide unmatched comfort for users to pay and send money internationally fast but would also open up plenty of business opportunities. The remittance market alone is forecasted to grow to $930.44 billion by 2026 at 3.9% CAGR AMR.

3. Convergence of Social Media and Mobile Payments

Social media is an integral part of daily life and is likely to play an even more important role in the foreseeable future. For instance, such platforms are predicted to offer adjacent financial services. Imagine such spheres as credit, savings, and insurance embedded into an app where you already spend plenty of time.

Apart from the opportunity to pay for an increased number of services, social media and messaging can merge with payment platforms for improved customer support experiences. There’s a growing number of businesses offering clients the opportunity to chat and pay - think apps like Venmo and xZelle.

4. Mobile Wallet Cloud Integrations

A mobile wallet that features cloud-based technology is a solution that enables users to pay in a frictionless manner due to a network of remote servers. With all devices, modules, and network paths having a duplicate kept in a cloud environment, there is no SPOF (Single Point of Failure). Thus, apart from convenience, such solutions also enhance payment safety.

5. Sound Wave-Based Payments

Audio signal-based payments are even more advanced than the NFC technology. Thanks to it, a user doesn’t need a credit card terminal, banking app, or mobile wallet to pay for a product or service. Such transactions are powered by sound waves that contain encrypted payment data, making internet connection redundant to conduct the purchase.

Similarly to a mobile wallet, you don’t need any additional hardware to avail of sound wave-based payments functionality, which makes it easy to pay using it. It’s also very convenient, as you don’t have to carry anything like a credit card or cash with you - it’s all in your smartphone.

As you can see, the mobile payment systems’ role is likely to gain even more significance on a global scale. Therefore, it is highly beneficial for merchants to be adaptive and process mobile payments. Besides, the integration of mobile payment systems alongside card payment processing is no longer a challenge for a business if you find the right service provider, such as Payneteasy.

Mobile Payment Systems Solution from Payneteasy

At Payneteasy, we are channeling all our multi-year experience to provide clients with smart mobile and card payment solutions tailored to their needs. Since 2006, we have been closely cooperating with PSPs, banks, nonprofits, and financial institutions worldwide and know exactly what can improve your business’s performance. Here's what we offer:

• Payneteasy Payment Gateway. This white-label solution is convenient, reliable, and fast to integrate. It has the flexibility to cater to any type of payment interaction and includes an advanced management system with over 150 customizable anti-fraud filters.
• Smart.mPOS. Processing payments with mPOS terminals has never been easier than with the Smart.mPOS solution from Payneteasy. We offer a user-friendly SDK library for Android and iOS, a convenient management system, and multiple banks support in one solution.
• Customized solutions. We are happy to provide our clients with tailor-made service packages to maximize the benefits your business receives.

It is our pleasure to assist you, so don’t hesitate to contact us anytime regarding card and mobile payments and other software and hardware solutions for your business! Simply fill out the form with some details on your project, and we will get back to you within one workday.