Mobile Payment Systems: Types, Benefits, Challenges & Integration Tips

Smartphones and tablets are the devices that the majority of consumers have at hand at all times. Thus, regardless of whether you sell your products or services online or in-store, integrating mobile payments is vital for offering a smooth shopping experience for your customers.

Mobile payments allow business owners to better connect with customers, safeguard personal information and privacy, and drive sales revenues up. In this guide, we talk about some of the best and most popular mobile payment options and explain how merchants can effectively navigate the challenges and reap the benefits they offer. Read on for all the details!

What Are Mobile Payment Systems?

Mobile payment systems are services that enable consumers to pay for purchases via Apple or Android smartphones, tablets, or wearable devices using all major credit, debit, and gift cards, alongside bank account information.

Due to their universality, these solutions are steadily becoming more and more popular tools in global commerce and are driving impressive growth in the non-cash transactions field. Let’s go ahead and explore the wide range of mobile payments available to the public.

Types of Mobile Payments

Nowadays, a variety of different types of mobile payments exist, including:

• Browser-based payments. Consumers can simply enter the 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, like Samsung Pay, Google Pay, and Apple Pay allow consumers to make both in-store and eCommerce payments.
• SMS payments. You can enable your customers to pay for purchases through SMS. All they will have to do is send a message to a specified number. Once the transaction clearing process is complete, the sum will be added to the consumer’s phone bill.
• Mobile Point of Sale (mPOS). Retail merchants can turn an assigned smartphone or tablet into a powerful mobile point of sale tool.
• Mobile P2P. Peer-to-peer payment apps, like PayPal, Zelle, Venmo, or Cash App, make the mobile purchase process simple and fast for shoppers.

Now, we will take a look at how these mobile payment methods operate - keep reading for valuable insights!

How Mobile Payment Solutions Work

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

NFC Chips

If your customers are using an NFC-enabled mobile wallet, they can simply hold a mobile phone, tablet, or smartwatch over a point of sale terminal to complete a contactless purchase.

This practice is possible due to the near-field communication chips embedded in the phone and the point of sale machine, enabling them to safely exchange information via radio-frequency identification (RFID).

This near-field communication technology eliminates the need for clients to fumble with cash and physical debit or credit cards, which allows the completion of contactless payments in a matter of seconds. Additionally, NFC data transfer is encrypted, which ensures that personal information is well-protected.

Network Tokens

Network tokens help businesses to avoid dealing with personal information, address privacy concerns, and manage the risks of security breaches. But how exactly do they work?

In short, when a person adds a debit or credit card to a mobile wallet or mobile payment app, the network generates a token to replace the card's primary account number (PAN). It is made possible by means of mobile payment tokenization and is among the most reliable ways of securely storing and processing consumers’ transaction information.

In other words, this token is used as a tool to substitute the actual card details during the payment. It means that even if a hacker gains access to the token, it holds no meaningful info without the added context of the original debit or credit card.

QR Codes

These are secure tools used to exchange encrypted payment information. It is a convenient method for both merchants and customers, because a quick scan of the QR code is enough to conduct a contactless mobile purchase.

Due to their ease of use, QR codes are becoming increasingly popular worldwide. In 2022, the global market size for QR code payments was roughly valued at $9.98 billion. By the end of 2023, this figure is expected to reach approximately $11.12 billion.

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. That’s all - the mobile point of sale is ready to be used for accepting mobile payments.

Thus, there are plenty of ways for businesses to start using mobile payments. But is it worth investing money and other resources? Let’s go ahead and delve into this topic!

Trends and New Developments in the Mobile Payments Sphere

The advent of digital services across various spheres has given way to innovative financial technology. In fact, as per a recent PwC survey, 86% of respondents agree that conventional banks will collaborate with newly emerging financial technology providers as primary sources of innovation.

What’s more, a full transition to cash-free online payments might become the future standard, as projections suggest they could double by 2030.

The combination of these factors is anticipated to give rise to a number of fresh trends and boost some of the existing developments that will shape the mobile payments industry in the years to come, namely:

The Continued Rise of Mobile Wallets

According to predictions, the mobile wallet market is set to reach a staggering $16.2 trillion by 2031, driven by the growing adoption in rural regions worldwide. It is mainly due to the fact that digital wallets allow a person to pay securely and conveniently online and in physical stores while also being more accessible to population segments that used to be underserved.

Tap-to-Pay for Businesses

Starting from 2022, businesses became able to accept contactless payments not needing any tools in their inventory other than a phone. For instance, through the Tap-to-Pay feature on Apple’s iPhone, coupled with a dedicated app, businesses can seamlessly receive face-to-face, contactless payments.

The best thing about this feature is that involves a wide spectrum of popular payment methods, from physical bank cards to Apple Pay and various other wallets. Thus, businesses no longer require a point of sale or additional hardware products to accept payments.

Similar features are available through some Android apps.

More BNPL Integrations

The popularity of Buy Now, Pay Later (BNPL) services has been peaking in the years following the global pandemic. What’s more, the integration of BNPL services into mobile apps is expected to become even more widespread in the foreseeable future.

More and more mobile payment platforms, including Amazon, ASOS, and H&M, to name a few, are partnering with BNPL providers to allow consumers to split payments directly at checkout, without having to leave the app.

This practice mostly caters to eCommerce clients who may not have traditional credit cards and prefer more flexible payments due to lacking instant access to money.

Peer-to-Peer Payments with Digital Money

The rise of digital money has opened up fresh avenues for P2P payments. Many mobile apps have dedicated wallets running or in the works, allowing people to send and receive payments using these assets.

This trend could potentially lead to both more efficient cross-border transactions and reduced reliance on traditional intermediaries at the same time. However, regulatory policies and the volatility of some currencies are still major challenges preventing the widespread adoption of this practice.

Advantages of Accepting Mobile Payments

So, you still have not decided whether you should implement one or multiple mobile payment solutions in your business operations? Here is a list of the advantages they offer to help you make up your mind:

• Improved customer satisfaction. Mobile payments help merchants support a smoother and faster transaction flow and ensure that every person is content with the checkout experience.
• Boosted convenience. Fast and flexible transactions can be conducted from home or from anywhere else in the world with just a few taps of the finger, as long as the shopper has a mobile phone with them.
• High security and privacy levels. Mobile payments often use advanced data protection and authorization features, like multi-factor authentication, biometrics, tokenization, and other technology.
• Increased retention rate and customer loyalty. When customers are content with their mobile shopping experience and feel that their funds and personal information are secure, they are highly likely to return to the merchant who provided such exceptional service.
• Simplified accounting. Mobile payments can optimize your accounting. Since such solutions usually integrate with your existing point of sale or eCommerce platforms, all the details related to purchases are automatically recorded, reducing the need for manual entry, simplifying reconciliations, and minimizing errors in financial management.
• Amplified sales revenue. The use of mobile payment solutions 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 sales revenue flow.

Besides, the mobile payments’ role will likely manage to gain even more significance on a global scale, with the potential to overtake cash transactions someday. Therefore, it is highly beneficial for merchants to focus on adapting their operations to the current trends and start processing mobile payments.

But are there any challenges associated with mobile payments that merchants must be aware of?

Challenges Linked to Mobile Payments

Now that you know what kind of perks come hand-in-hand with mobile payments, as a business owner or merchant, you might be wondering whether are associated with any challenges. To understand the full picture, you need to remember about the following aspects:

• Compatibility and integration obstacles. Different mobile payment options and apps may have varying compatibility and integration requirements. Ensuring that your business's software and hardware can work with the full range of mobile payment solutions can be a technical challenge.
• Customer education. Not every person trusts mobile payments because they involve relatively new technology. Some customer groups may also be concerned about the mobile payments’ level of privacy and protection against fraud. To build trust, educate your clients about mobile payments’ advantages and security measures.
• Possible connectivity issues. Mobile payments heavily rely on Internet connectivity. So, in case of a network outage or slow connection, payments could be disrupted. Thus, every business, regardless of whether its scale is big or small, needs a plan that covers the options on how to manage unforeseen situations.
• Dependency on third parties. Even large services that offer mobile payments often rely on third-party payment processors, and sometimes these providers experience downtime, technical problems, or policy changes that can ultimately affect your business operations.

However, the integration of mobile payment solutions stops being a challenge when you find an experienced and reliable service provider like Payneteasy - read on to find out how we can aid your company to get started on its journey with mobile payments and fully upgrade the checkout experience it offers.

Mobile Payment Solutions from Payneteasy

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

• Payneteasy Payment Gateway. This white-label solution is convenient, reliable, and fast to integrate. It is flexible enough 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 has never been easier than with the Smart.mPOS solution from Payneteasy. We offer a user-friendly SDK library for Android and Apple iOS, an easy-to-use management system, and multiple bank support in one solution.
• Customized solutions. In search of a unique solution that matches your business requirements best? We are happy to provide our customers with tailor-made service packages and tools to maximize the returns your business receives.

Excited to get started? It is our pleasure to assist you, so, please, do not hesitate to contact us anytime if you need any help! Simply fill out the form available on our website with some details on your project, and we will get back to you with a free quote within one workday.

Also, feel free to ask any questions regarding our services using the phone number (+442045771752) or email ([email protected]).