The global market for mobile payment processing was valued at over $1.4 billion in 2020, with a projected growth rate of 23.8 percent by 2026.
Accepting mobile payments is an efficient strategy to enhance profitability and consumer convenience in running retail, e-commerce, or mobile business (for instance, a food truck).
With mobile payment processing, you may collect payments both in-person and online. You may do it with standard credit card swiping (using a mobile POS system) or contactless EMV chip cards and mobile wallet payments utilizing near field communication (NFC) technology.
We’ve put together this guide to explain mobile payment processing, how it works, and what you need to know to get started with mobile payments.
Mobile payment processing and how it works
Mobile payment processing is a broad phrase that refers to the several types of transactions that may be completed using mobile technology.
This covers mobile wallet transactions, credit card reader transactions, and other transactions from a customer’s mobile tablet or smartphone (like transfers, in-app purchases, or peer-to-peer payments.)
Mobile payments are processed using a card reader attached to a mobile POS or near field communication (NFC) technology. A set of communication protocols allows two electronic devices to communicate over a four-centimeter or less distance, allowing for a contactless card and mobile wallet payments.
Types of mobile payments
To fully appreciate the benefits of mobile credit card payments, you must first learn about the four primary forms of mobile payments.
Mobile point of sale (mPOS)
A mobile point of sale is a smartphone, tablet, or other wireless devices that can perform the same activities as a standard point of sale (POS) terminal but wirelessly.
mPOS systems are used by retailers and service-based enterprises such as restaurants and taxi drivers to collect consumer payments on the go. They’re also fantastic for pop-up stores and other events when you need to collect payments in person if you have an e-commerce firm.
Because mobile POS systems make it simpler for clients outside of your immediate geographic area (such as a physical shop) to conduct transactions, they are becoming increasingly popular.
Online sales transactions using wireless electronic devices such as tablets or smartphones are called mobile e-commerce (m-commerce). This covers goods purchases and sales, internet banking, and bill payment. Mobile e-commerce refers to any transaction that is completed using a mobile phone.
These devices interface with neighboring computer networks set up to execute the digital transactions indicated above to handle mobile payments.
Mobile wallets are an alternative payment option that allows consumers to securely save their credit card information in an app on their smartphone or other mobile devices. This will enable customers to make in-store payments by scanning or touching their phones easily.
Types of mobile wallets include:
- Apple Pay
- Google Pay
- Click to Pay
Mobile and digital wallets accounted for roughly 45 percent of global e-commerce payments in 2020, according to Statista, making them one of the most common payment methods globally. By 2024, it is expected that this ratio will have risen to above 50% globally.
The phrases mobile wallet and digital wallet are equivalent, with one minor distinction: the technological capabilities of each. While both wallets securely save payment information for future transactions, a digital wallet does not allow users to conduct in-store contactless payments by holding their smartphone near a point of sale terminal.
Only mobile wallets with contactless near field communication capabilities, such as Google Pay or Apple Pay, may be used for online mobile payment processing. In contrast, applications like PayPal only have digital wallet technology and can only be used for online mobile payment processing (or both).
Peer-to-peer mobile payments (P2P)
Peer-to-peer mobile payments (also known as P2P payments) are payments that enable multiple people to send money to each other via a mobile app using their bank accounts or credit cards. P2P payments are commonly used to divide a meal or grocery expenditure.
What you need to start mobile payment processing in your business
NFC reader or QR code payment app
Near field communication (NFC) is a technology that allows you to accept tap-to-pay and contactless payments from credit cards and mobile devices. The consumer taps or waves their EMV chip card or mobile wallet app in front of the gadget to finish the payment.
On the other hand, customers may scan QR codes to pay without having an actual card or a mobile wallet app, allowing you to receive payments anywhere. You may produce digital QR codes on your mobile device, have your consumers scan the QR code with their smartphone, and display a payment page on their device within seconds, allowing them to complete the payment process.
Payment card industry compliance (PCI compliance) refers to the operational requirements that your company must adhere to safeguard and protect credit card data given by consumers during transactions. The PCI Security Standards Council is in charge of developing and overseeing them.
Safety precautions such as utilizing updated anti-virus software, issuing a unique ID to each staff member with computer access in the event of a breach or leak, evaluating security systems and staff operations regularly, and more are part of PCI compliance standards.
Most mobile payment processing applications include PCI compliance features and make it simple to maintain them up to date.
Ability to accept multiple payment methods
If their chosen form of payment isn’t accessible, 59 percent of customers abandon their cart. As a result, accepting various payment methods, including local payment methods, is critical.
Ensure that your mobile payment processor accepts the payment methods that your clients are familiar with.
What degree of customer service do your mobile payment processing applications and devices require? Is the user interface basic and intuitive to use? You’ll want to be able to readily contact support if you encounter payment processing or security concerns, but you also don’t want to have to seek help to troubleshoot all of the time.