People and companies across the world are rapidly embracing mobile payments for a number of reasons. Their overall convenience makes them suitable even when paying somebody currently overseas. But what is mobile payment? And how can it help you simplify your transactions?
To discover the answers to these questions (and plenty of others), read our detailed guide to mobile payment platforms.
What Is Mobile Payment for Buyers and Sellers?
Mobile payments are any transactions that use a mobile device. There are various apps and systems that facilitate these payments, and each one is best in certain situations. The format as a whole has become especially popular in recent years. In fact, according to the Mobile Wallets Report, there will be over 4.8 billion online wallets by 2025.
Mobile wallets come in many forms across phones, tablets, and even watches. Google Pay and Apple Pay are just two of the most common (and convenient) platforms for payments.
There are five types of mobile payments that you should be aware of as a merchant or buyer. These include:
- Browser payments. These happen in your device’s browser through a website’s checkout form or an online wishlist.
- App transactions. Similar to the above, but instead use dedicated mobile wallet apps with added security layers.
- Payment links. The merchant sends a secure transaction link to the buyer through email or text.
- QR code transactions. Buyers scan with a device to enter a checkout and conduct their purchase.
- Mobile point-of-sale payments. The business owner or employee uses their mobile phone as a card-free terminal.
How Does Mobile Payment Technology Work?
Mobile devices have revolutionized contactless payments all over the globe, especially with the development of Near-Field Communication (or NFC). This serves as the main building block for these transactions. NFC uses magnetic coils on the buyer’s mobile device to communicate with a terminal and complete the purchase.
While some mobile payment apps involve putting in your card details, NFC skips this entirely. As a result, this technology is especially common for in-person cardless payments. Here is how the NFC approach usually works.
1. Activation
Once the vendor calculates the total amount due, their terminal prepares to accept a contactless payment. The buyer then gets their device out or loads their payment app. When they hold it to the card reader, the terminal emits a signal to activate its NFC chip.
2. Communication
Using radio waves, the device and terminal connect to each other. At this stage, the mobile app encrypts the user’s bank data, replacing it with a special token. For the purpose of the payment, this is the customer’s account, but it will not reveal their payment details.
3. Authorization
The customer’s device then transmits the token to the terminal. There’s also the option of using devices with Magnetic Secure Transmission (or MST) to replicate a card’s magnetic strip. In either case, the two devices authenticate one another via the token or other forms of data.
4. Transaction
When the customer’s device transmits their information, the vendor will receive the money. Their own terminal or device then finishes processing the payment with approval from the customer’s bank. The process takes just a few seconds, which is exactly why mobile payment technology is popular.
The Benefits of Mobile Payments for Buyers
No matter how you make your mobile payment, you’ll see plenty of benefits. Convenience is the main reason buyers enjoy using these transactions. They can complete payments without using debit cards and sometimes without adding their details. Like any contactless method, it’s also a much quicker process!
This card-free approach gives more security to the buyer. They know their details are safe, and they won’t have to worry about misplacing their card. Digital wallets also often need a password, a PIN, or biometric identification. After completing the transaction, the merchant’s system stores no sensitive buyer data.
Mobile transactions are also more accessible, especially if you’re in another country. Converting currency yourself isn’t necessary; you can simply place your device near the reader. In addition, many of the related apps offer an intuitive user interface. This cuts down on age-related barriers to their use.
With mobile payment solutions, the apps you use can give real-time updates about your balance and budget, if the app is well-designed, of course. This gives you better financial awareness — which could then affect your spending habits for the better. Though these apps make it easier to spend money, they still help you know your limits.
Finally, these payments are also simply more hygienic. Handling cash and change could expose you to germs, for example. Card terminals will also come into contact with hundreds of debit and credit cards between cleanings. For mobile purchases, placing the phone an inch away should begin the transaction.
Examples of NFC Payment Apps
Customers using a mobile device for their payments have plenty of app options. The exact ones they go for might depend on the device’s make and model. However, the broad features of each are mainly the same. With this in mind, here are the three best mobile payment apps that make use of Near-Field Communication.
1. Apple Pay
Modern iOS devices, including iPads, iPhones, and Apple Watches, come with NFC chips. This is at the heart of Apple Pay, the tech giant’s payment solution. Fitting the company’s reputation for security, Apple Pay heavily encrypts your data before sending it to the chip reader. To use this app on a phone, double-click the home button (for Touch ID) or side button (for Face ID).
2. Google Wallet
Unique in its ability to cross the iOS/Android divide, Google Wallet helps online and in-person payments. This flexibility makes it very popular, as does its ability to hold onto digital tickets and even boarding passes. However, the transactions can take three to five days to finish processing. Small businesses might prefer to avoid Google Wallet if they’re worried about their bank accounts.
3. Samsung Wallet
This app formerly relied on Magnetic Secure Transmission, though new Samsung devices have started using NFC. Samsung Wallet is only for the company’s mobile devices, and other Android gadgets must use Google Pay. This mobile payment system offers discounts (unlike Apple Pay) but saves rewards for Samsung products. Overall, it still gives the same broad functionality.
How Mobile Payments Help Small Businesses
Companies of all kinds benefit from mobile payments, but small-scale enterprises may find them especially helpful. For example, mobile POS transactions save money on special equipment. An app on your phone is usually more than enough. If using a peer-to-peer platform, you may even avoid the extra fees that card terminals bring!
Remote transactions are here to stay. This means your company will miss out on sales if you’re not accepting NFC payment apps. The fact these payments are a lot simpler for customers will also help your business. Every added convenience that makes payments easier lets the company guide visitors toward a purchase more easily.
Loyalty cards are yet another feature mobile payments can provide. Physical cards that build up virtual points with every purchase are often only for larger companies. Online transactions allow you to set up a similar system without major expenses. With these features, you could give your frequent customers discounts, cashback, and even exclusive deals.
Similarly, mobile payments let you easily build up your customer data. Though your terminal and the apps you use won’t store sensitive information, they still keep in-depth records. This not only simplifies your bookkeeping; it even gives actionable insights. You’ll have a better idea of which products are popular and your customers’ purchasing preferences.
Types of Mobile Payment Apps
Even beyond contactless NFC apps, there are plenty of solutions available that make payments easier. General peer-to-peer mobile banking apps, for example, also allow people to make most transactions with just a phone. Here are the main payment app types you should be aware of.
1. Open-Loop Apps
Most NFC apps class as “open-loop,” meaning their virtual wallets are available to use at various retailers. They directly interface with the vendor’s POS system without the use of chip cards. However, there are still some merchants (especially smaller ones!) who don’t have the right equipment for this.
2. Closed-Loop Apps
Some retailers have their own dedicated apps for customer payments. This makes it simpler for them to integrate a loyalty program or gift card system. Buyers can “load” money from their bank into these special accounts. Once you add this money, you usually can’t withdraw it back to your original account.
3. Peer-to-Peer Apps
These apps let anyone simply send money to friends or businesses by connecting with their bank account. They’re often as simple as typing in the amount and sending it to another account. If a customer needs to split a bill, they can easily send their share. In many cases, it’s even possible to add P2P virtual wallets to an open-loop NFC system.
How Accessible UI/UX Design Helps Payment Apps
What is mobile pay without a strong user interface design? You can only enjoy the convenience of these apps if they’re accessible. For example, P2P CashApp transactions are incredibly simple. The platform automatically opens on a screen that lets you type a number and instantly pay or request it.
A clear visual hierarchy on these platforms generally makes it easy to find their money-sending functions. Apple Pay embraces its parent company’s minimalist design philosophy at every stage. Its one-touch payments similarly reduce the number of buttons a user has to press.
Many virtual wallets also prominently display a graphic of your card when paying. This contains no identifying information, so users won’t have to worry about this infringing upon their privacy. If a buyer has multiple cards, this lets them easily see (or even change) which one they’re using.
Some closed-loop apps, however, might hinder the experience. As these are ultimately trying to entice you to buy at their store, they often include product ads. This could show you good deals for your account but also add visual clutter. This slows the user experience down to a crawl.
H2 – What Are the Best Mobile Payment Apps?
There are dozens of popular payment apps, each with its own unique twist on managing your finances. However, key features (and conveniences) should still be considered when deciding on an app. With this in mind, here are the best choices across all types of mobile payment apps.
1. CashApp
If you need to carry out P2P payments, CashApp may be your best bet. This app integrates with other virtual wallets and gives each user a unique “cashtag” to simplify their transactions. Venmo is similar but has a more complex verification process and doesn’t include CashApp’s two-factor authentication.
2. Google Wallet
Owing to its accessibility over a range of devices, Google Wallet is a great open-loop app. If you own a non-Samsung Android phone, this might be your only substitute for a physical credit card. Compared to similar apps, Google Wallet also offers more in terms of cashback and discounts.
3. Bank of America Mobile Banking
Of all the banking apps, Bank of America (BofA) Mobile Banking perhaps has the most features. It lets you easily check your FICO score, balance, savings, and more — acting as a complete financial management platform. The BofA app also comes with a virtual assistant named Erica.
4. Starbucks
In terms of closed-loop systems, Starbucks might offer the most for its customers. The interface is relatively clean, and it even lets buyers pre-order before they get to the store. Users can save their favorite drinks and earn special points with every in-app purchase they make.
Mobile Payments: Unlocking Convenience for All
You no longer have to wonder about what is a mobile payment. Through payment apps, you’ll discover the importance of simplicity in every transaction. In many cases, this is because the app’s unique interface puts their customer first.
At Page Flows, we’ve collated a full library of excellent UI examples that show true convenience in app design. Check out our user flow recordings today and learn how the best apps in any sector come together.
