Mobile Payments From A Business Perspective

In the last few years, mobile payment systems have been some of the most useful and quickly growing innovations in technology. Mobile payments are secure and regulated transactions that people can make through mobile devices, usually smartphones. There are two main methods of making mobile payments. The first is commerce payment, in which customers access websites on the internet browser of their device, add an item to the shopping cart, and order and receive the desired items. The second method involves the use of mobile wallets. Mobile wallets on smartphones come in the form of apps and store credit card information, allowing one to pay for things digitally by scanning smartphones over terminals. This is done using Near Field Communication (NFC) which enables devices to communicate wirelessly when in close proximity (Square). While the first method has become widespread and almost common practice today, contactless payment systems are still in the early stages of growth.

Many companies have anticipated the increased usage of mobile payments and have begun to develop their own technologies in order to entice users with this new practice that emphasizes convenience and efficiency. Apple has been a major player in the mobile payment industry since 2014, when it launched Apple Pay (Rampton). Apple Pay is Apple’s system of mobile payment that allows its users to make secure purchases in stores, apps, and through internet browsers. Apple Pay is partnered with Apple Wallet, which allows users to store multiple credit and debit cards in the app. Apple Wallet allows users to scan phones over terminals in stores and pay in this manner.

Apple is unique in its development of Touch ID and Face ID as forms of security in mobile payments. Touch ID was introduced first and required users to scan their fingerprints on fingerprint scanners on iPhones before making purchases that used cards stored in Apple Wallet. This added an additional level of security in order to persuade users to slowly adopt mobile payment methods. Face ID took this further and integrated facial recognition software in place of Touch ID in order to make purchases on iPhones. In addition to using these security methods for non-contact payments involving scanning terminals, Apple has integrated these methods into purchases on web browsers.

While traditional online stores offer credit cards and PayPal as payment methods, some websites today offer Apple Pay as an additional option. One can choose this option and then use the fingerprint or facial recognition technology to access the Apple Wallet. From here, users can use their stored credit cards and pre-set shipping information to make quick purchases from websites. Ultimately, Apple has exemplified through their technology the two major ways in which mobile payments are used today. Apple has seamlessly integrated these systems into their smartphones and maximized convenience and efficiency in the daily lives of their users. This is a major reason why Apple users make up a large portion of the population that utilizes mobile payment systems, and why research shows that Apple Pay is expected to make up 50% of global mobile wallet users by 2020.

While mobile payments are still far from becoming the norm, they have many benefits that indicate a promising future for the practice. The most obvious advantage of using mobile payments is customer convenience. Using Apple Pay, one can simply scan the phone at a terminals instead of having to pull out credit cards or cash. From a business perspective, the ease of contactless payments in physical stores allows employees to engage with customers throughout the transaction, upsell additional products, and turn people into loyal customers. Also, converting mobile devices into card readers, with the necessary attachments, eliminates the need to purchase expensive equipment and reduces cost of paper and ink by emailing receipts instead of printing them. While this process is especially useful for small businesses that may not have the funds for traditional receipts, companies such as Apple and Chick-Fil-A have also adopted this method of payment in their stores. Furthermore, mobile payments allow business to more effectively build loyalty programs. Customers can receive notifications of sales directly from mobile apps, and can even receive reward points or coupons when making transactions.

Finally, the ability of mobile payments to provide customer data allows for the study of shopping behavior, patterns, and demands of customers. Improving customer service using this data is a key factor in increasing sales (Due). Despite the benefits of mobile payments outweighing the risks, there are some issues that need improvement as mobile payments become more ubiquitous. For example, mobile payment technology requires new hardware, such as terminals/phones that support Near Field Communication. In the long run, purchasing and implementing this new infrastructure and maintaining a strong internet connection will still be less expensive than a POS system, but the cost of the update can be challenging for small business owners (Due). Also, despite the increasing support for mobile payments, user adoption of mobile wallets and scanning smartphones over terminals is still relatively slow. For this reason, there are still a large number of businesses that have not accommodated methods such as Apple Pay. While companies that do adopt these methods today may only be experiencing minimal advantages, they are in good position for increased benefits as the industry grows. By far, the most common issue that prevents customers from using mobile payments is security. Customers are hesitant to use mobile payment methods because of high profile breaches, such as those at Adidas, Best Buy, and Facebook this year. However, many believe that using mobile payment systems is more secure than using physical cards because in the event of a security breach, many banks offer zero-liability protection if cards are used fraudulently (Due). People are hesitant to embrace change but will eventually realize that mobile payment systems are more secure than the public perceives them to be.

In conclusion, all signs point towards mobile payments being adopted by more people each year. In fact, it is estimated that by 2020 about 90% of smartphone users will have made a mobile payment. While Apple has been one of the major players in this industry, it is one of many businesses that have joined this trend. Other companies have developed their own contactless payment systems, such as Android Pay and Samsung Pay, and some companies even allow contactless payment through apps, such as Starbucks. In addition, Apple Cash and Venmo are two examples of entities that support mobile person-to-person (P2P) transfers by supporting bank transfers through smartphones. Venmo alone reported transferring $1 billion in January of 2016 alone, indicating promise for this type of mobile payment system.

One improvement that would help make mobile payments universally accepted is creating a global standard for mobile payment technology. Establishing a technology standard with similar regulations for all countries could help already established mobile payment services expand and become established across the globe. Ultimately, mobile payment methods are trending positively and are clearly on their way to becoming the ideal payment methods due to convenience and increased security. Those who use mobile payment systems already believe this, and more people are coming to this conclusion each day, indicating a bright future for mobile payment.