Mar 25, 2015

Mobile payment, also referred to as mobile wallet, mobile money and mobile transfer, basically implies payment performed with the use of a mobile device. This type of payment is undertaken without using cash, checks, credit or debit cards. While this technology is not new, it has recently started becoming increasingly popular, thanks to the introduction of various new devices and OS’, which support this type of payment.


A number of financial institutions, credit card companies, mobile carriers, OEMs; also giants such as Google and Apple; support mobile payment. Many of these, including Google, Apple and Samsung, have their own exclusive payment system in place.

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Mobile Payment Models

There are predominantly 5 mobile payment models, which are as follows:

• SMS-Based Transactions

As the name suggests, the customer sends a payment request via SMS or a USSD code. He is charged a premium fee for this service, which is applied either in his online wallet or phone bill. The merchant selling the goods or services is then notified regarding payment successfully made for the transaction.

This type of payment includes MMS messages as well, which merchants could use in order to deliver digital content; such as ringtones, wallpapers and the like: to their customers. MMS can also be used to deliver QR codes, which can be scanned by the user.

SMS payments, however, come with several downsides, such as slow sending speed, potential chance of message loss and so on.

At present, only services such as bill payments, membership confirmation, flight seat upgrades and so on, use this type of payment.

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• Direct Mobile Billing

In this case, consumers wishing to make payment, have to follow a 2-step authentication system. They first authorize their identity with a PIN and then with a One-Time Password (or OTP) sent exclusively to their phone. The user’s mobile account is charged at successful completion of the purchase. This method is more preferred, as it is more secure and more convenient as well.

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• Mobile Web Payments (WAP)

Systems using Wireless Application Protocol or WAP enable customers to access web pages or downloadable content on their mobile phone. Users can easily complete payment via mobile. However, users will have to reveal their credit or debit card information unless either an MNO supports the service or the amount is directly charged on their phone bill.

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• NFC Payment

Contactless Near Field Communication (NFC) is emerging as one of the most preferred methods of mobile payment today. Here, users merely have to wave their mobile phones, equipped with built-in smartcards, at the concerned terminal. Some of these systems require PIN authentication before completing the transaction. The amount due is then either deducted from the user’s prepaid account or is charged to his or her mobile or bank account.

Considering the present rise in the popularity of this system; also taking into account the fact that most of the latest mobile devices support NFC technology; several banks, companies and merchants are beginning to install terminals which support this type of mobile payment.

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• Mobile Wallets

Mobile wallet services such as Apple Pay, Google Wallet and Samsung Pay are comparatively more convenient and safer too, as they enable users to make cardless payments. They first have to register their account and enter their credit card information. Once that is done, they merely have to authenticate that account with their PIN, at the time of undertaking the transaction. Services such as Apple Pay use the Touch ID feature to authenticate the user. 

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