The way we handle money these days is changing every day, with mobile transactions and digital wallets taking centre stage in more recent days. Mobile banking allows users to perform transactions using their smartphone or watch at the tap of their device. This article aims to provide arm beginners with the knowledge required to understand mobile payments and their benefits, as well as to discuss the various types available and the security considerations to keep in mind.
It doesn’t matter if you’re a newbie. Yes, you may be late to the party, but at least you made an appearance, and that’s really all that matters. Besides, once you read this guide, not only will you understand how they work, but you’ll also wonder why you didn’t use such a method of payment before!
From business transactions, to paying for your morning coffee treat, you can even use a pay by phone casino in the UK. Trust us, when we say it’s a revolution, you’ll want to join no sooner than understand the concept!
Mobile Payment Types Explained
Mobile payments refer to whenever you use a mobile device (smartphone or smartwatch for example) to start and complete a financial transaction online. This could include paying for goods or services at a physical store, sending money to friends and family, as well as shopping online. Different types of mobile payments include:
- Carrier billing – this type of direct mobile payment implies that your purchases are billed directly to your next mobile phone bill.
- Mobile banking apps – many banks will offer the option of downloading an app that will allow you to manage your account while also being able to pay bills and transfer money directly from your phone. These apps are usually linked directly to your bank account and offer a simple and convenient way to manage your finances on the go.
- Mobile wallets – digital wallets such as Google Pay or Apple or Samsung Pay store your banking information securely by creating a virtual version of your credit or debit card on your device. By tapping your phone at a compatible point of sale, you’re able to make purchases in retail stores, as well as being able to shop online.
- Peer-to-peer payment apps – apps such as PayPal, Venmo and Revolut allow users to send and receive funds from friends and family in a simple, instant manner. These services are typically used to split bills in a social setting, paying friends back or making small transactions.
- QR code payments – some mobile payment systems make use of a QR code to simplify the transaction process. Here, you’re typically required to scan the code presented by the vendor to complete the transaction.
Understanding How Mobile Payments Work
The way mobile payments work depends on the method used, but generally speaking they all share a couple of common steps. These include:
- Set it up – the first step includes setting up your mobile phone payment method. If you’re planning on using a mobile wallet then you’re going to need to download the relative app and possibly verify your identity online. You’ll also need to link peer-to-peer and other banking apps to your primary bank account following a similar verification procedure.
- Authenticate – when mobile payments are involved there can never be enough security, and depending on the app or provider you’ve chosen you’ll probably need to authenticate first via fingerprint, face recognition, password or PIN number.
- Initiate – when making a payment you’ll typically be required to open the app and select the account and payment method you’d like to use before confirming your transaction. If you’re paying for something in-store using a mobile wallet, you’ll probably need to unlock your phone and tap it against the point of sale system.
- Process – once the payment has been verified, this information is passed on to the final recipient or vendor and will authorize your payment if it ticks all the boxes.
- Confirm – and lastly, once your transaction is complete, you’ll receive a confirmation message on your device along with a notification, email or receipt from the vendor.
Why Mobile Payments Make Sense
- Mobile payments offer several advantages when compared to traditional payment methods, which makes them a popular option for both business and consumer. Here are a couple of benefits for you to consider:
- Convenience – one of the main benefits of mobile payments is their sheer convenience. With all your financial information stored in your phone, you’re now able to easily perform transactions in real time without needing to carry around any cash or cards.
- Speed – tapping your phone tends to be faster than fumbling to find your card or counting your cash. This efficiency is of benefit to both business and consumer, reducing processing time and improving the shopping experience overall.
- Security – there are also a number of specialized security features associated with mobile payment options when compared to traditional payments that include biometric authorization, encryption and tokenization to help prevent theft and fraud.
- Tracking – many mobile payment apps will also keep a record of all your transactions, making it simpler to keep track of your spending habits as well as to manage your finances. This can be particularly helpful when it comes to expense management and budgeting.
- Loyalty programs – several of these payment methods will also include rewards and/or loyalty programs that reward their users with points or discounts any time they choose to use this method that enhances the user experience overall.
The Bottom Line
There’s no denying that mobile payments are changing the way we handle our finances, by offering superior convenience, security and speed with each transaction. By learning more about the various options available as well as learning how they work, you too could be on your way to managing your finances more efficiently, even if you’ve never thought about it before. As technology continues to grow and evolve, the future of mobile payments will also continue to transform, creating more opportunities and innovation for businesses and customers alike.