Different Types of Mobile Payment Systems
Going to get groceries, reaching for your wallet, counting the money, and paying at the cash counter – sounds like something of an old-school moment, doesn’t it?
Needless to say, paper money is losing its appeal.
A survey of over 2000 US citizens conducted by the U.S. Bank revealed that people do not prefer to carry a lot of cash now.
One of the reasons for this shift is the rise of mobile payments. Rather than driving to the grocery store and paying with cash, people prefer ordering groceries online and paying electronically. Even if they choose to shop in-store, they opt for mobile payment options such as POS and mobile wallets rather than cash.
For an average consumer, there’s nothing easier than pulling out their smartphone; it has almost everything they need on it. Our phones double as calculators, cameras, calendars, and so much more. Why not add another method of payment to the list?
Mobile payment is taking off and in this blog, we’ll cover four main types of mobile payment systems so you can pick the best one for your business. But first, let’s take a look at what mobile payments are.
What are Mobile Payments?
Mobile payments are electronic payments made for a product or service and take place via a smartphone or tablet. With mobile payments, you can use credit/debit/gift cards, and even your bank account details (ACH) to pay for goods and services through a digital device.
Mobile payments represent a shift in consumer payment habits that provide greater convenience by eliminating the need to carry cash and checks or use credit cards more often.
Let’s explore four main types of mobile payment systems and how they work.
Types of Mobile Payment Systems
Browser-based Mobile Payments
Mobile browser-based payments, also known as web-based payments (or even online payments) provide CNP (card-not-present) transactions to customers using either a credit/debit card, gift cards, or even banking information (ACH) through their smartphones/tablets.
A CNP transaction is common for remote orders when neither the credit card holder nor the credit card is physically present at the time and place of transaction. The customers enter their payment details into a website on their mobile phones to make an online purchase.
Some websites offer built-in payment systems, while others use external payment options like Amazon and Paypal. The external payment options direct consumers to a separate browser window to complete their transactions. Either way, the whole checkout and payment process happens within the browser.
Consumers can use their smartphones or other digital devices to access the website, add their desired products to the shopping cart, and complete the purchase by filling out payment information on the website’s checkout form.
Browser-based mobile payments also allow a one-click checkout process that directs users from the products page to the checkout page with a single click.
What’s the best part? Unlike platform-specific apps, this type of mobile payment does not require re-installation. Furthermore, browser-based payment APIs can be integrated into pre-existing websites, allowing you to capitalize on the existing user base.
App-based Mobile Payments
App-based mobile payments are similar to browser-based payments. However, instead of navigating through the browser, users can pay through a dedicated mobile app (if that business has one). Users can pick and buy products and services within a closed ecosystem. All they have to do is register their credit/debit card or ACH information once and make a purchase with a few clicks.
App-based mobile payments are common among large businesses (mostly food businesses) and retailers like Starbucks, Burger King, and McDonald’s, to name a few who have built a dedicated mobile app for their consumers to make purchases.
Even if you’re not an industry giant and own a small business, you can integrate in-app mobile payments if your business has a running app. But keep in mind that in-app payments must be well-planned on optimized apps. The experience should be such that it adds to the customers’ convenience and reduces the chances of them abandoning the cart before checkout (which is a bummer).
Mobile Credit Card Readers
Mobile credit card readers are a new take on the old-school countertop card terminals. Rather than relying on fixed countertop card terminals, businesses can invest in add-on credit card readers that pair with their mobile devices and turn their smartphones and tablets into POS (point-of-sale) systems for on-the-go credit card acceptance. These mobile readers work the same way as fixed countertop terminals do; you can swipe or tap the credit cards and accept payment on the spot.
Another smart option for mobile payments is to use wireless credit card terminals, which look and function much like regular credit card terminals and have a magnetic strip or chip reader, a keypad, and a display screen. Wireless card readers rely on WiFi to accept credit cards in most cases.
Mobile payments do not necessarily require card readers. Businesses can also use their regular smartphones and tablets to log into a virtual terminal app and fill in their credit card or ACH details manually.
Are POS Systems Secure?
There are a few critical issues that come with POS software and can threaten the security of your business, like ransomware attacks and the security of customers’ private data. But don’t worry! Here are three simple tips to secure your POS system:
Implement best-practice configurations:
A skilled IT service provider is required to professionally install security software and apply a best-practice security configuration to the system. Also, make sure to get your IT systems regularly inspected by a professional.
Staff awareness and education:
Make your employees aware of the ransomware attacks, educate them on how to recognize and mitigate ransomware threats.
Systemize user security:
Make sure that the procedures responsible for protecting your POS system are in place when a staff member departs. Also, make sure that the departed member can no longer access any of your systems.
Contactless payment systems are on the rise, and this shift doesn’t seem to be reversed but accelerated in the future. According to a recent study, 54% of consumers said they planned to switch to retailers that provided contactless payment options.
Contactless payments don’t require any physical contact between the customer’s smartphone/ credit card and the POS system. This is one of the reasons why contactless payments are on the rise as these minimize human interaction in the times of a worldwide pandemic.
‘Near field communication’ (NFC) is the technology that powers contactless payments through a type of Radio Frequency Identification (RFID). NFC transactions take place over a certain radio frequency that enables the communication between the smartphone/ credit card and the credit card reader when they are put close together (generally 10 cm or even less).
NFC technology is similar to BLE (use of Bluetooth to authorize transactions) but only safer with greater security benefits. This technology also powers payments through mobile wallets like Apple Pay, Google Pay, Samsung Pay, and so forth.
Mobile wallets are a catalyst in contactless payment adoption worldwide. A mobile wallet is an app or a website that is used to hold your funds. It stores your banking information and allows you to pay without having your credit card physically present.
Apple Pay, Google Pay, and Samsung Pay are the most commonly used mobile wallets but you can also choose from third-party digital wallets like Venmo and Paypal. Mobile wallets are not limited to in-store purchases but can be used remotely for online payments as well.
Selecting the right mobile payment system comes down to balancing the customer experience with a greater value for retailers. But remember that the more modern payment options you cover, the more convenient it is for your customers.
We Can Help!
We know this was a lot of information to get your head around. But hey, you can always reach out to experts at CitrusBits for a free consultation or a custom-built POS system for your business!