Mobile payment methods

Various terminologies are in use to describe online financial transactions, including: Mobile Payment, Mobile Money, Mobile Money Transfer, Mobile Banking, e-Payment, e-Banking, Mobile e-Wallet, Mobile Wallet, and Online Banking. I will clarify a few of these.Online Banking and e-Banking are synonymous and refer to banking activities carried out on a financial institution’s web portal, as […]

Various terminologies are in use to describe online financial transactions, including: Mobile Payment, Mobile Money, Mobile Money Transfer, Mobile Banking, e-Payment, e-Banking, Mobile e-Wallet, Mobile Wallet, and Online Banking. I will clarify a few of these.
Online Banking and e-Banking are synonymous and refer to banking activities carried out on a financial institution’s web portal, as opposed to transactions carried out in a bank’s brick-and-mortar environment. The usual purpose of such transactions is to obtain account balance/statements, transaction details, or to carry out instant fund transfer or make bill payments. Carried out on a mobile device, these transactions become Mobile Banking, which a few financial institutions refer to as Mobile Money, although this phrase has also been used to describe activities such as sending money, receiving money, and purchasing goods and services on a mobile device.
Some of the common mobile payment methods are listed below.
The holy grail of mobile payment might as well be Mobile Wallet, a contactless procedure that is based on the technology of Near Field communication (NFC). (Refer to this column in Daily Trust of 1 October 2012 for details on NFC and Mobile Wallets.) However, the sentiment expressed by Jenna Wortham in Bits magazine on 27 July 2013 is common: “I’m still waiting for my phone to become my wallet.” Note that I have taken some Wikipedia entries and modified them in some of the list items below.
Direct mobile billing
You can use the mobile billing method during “Checkout” at an e-commerce site. With two forms of authentication (a PIN and password), your mobile account is charged for the purchase. Note that no credit/debit cards or pre-registration at an online payment solution such as PayPal is required.
Mobile credit card payments
Here, you simply enter your credit card details into a mobile phone to make purchases.
Mobile web payments
Using technologies based on Wireless Application Protocols (WAP), you can use web pages or other downloaded applications to make payments on your mobile device. You may still need a credit/debit card or pre-registration at an online payment portal (PayPal) for this type of payment method, except in the case that your mobile account is directly charged through a mobile network operator. Last year, Ericsson and Western Union partnered to expand the direct operator billing market, so that mobile operators could include Western Union Mobile Money Transfers as part of their mobile financial service offerings.
NFC-based payments
This type of mobile payment is contactless and is what is often referred to as Mobile Wallets. It uses Near Field Communications (NFC) to pay for purchases made in physical stores or transportation services. Your payment could be deducted from a pre-paid account or charged directly to a mobile or bank account. Mobile Wallet is a sophisticated “tap-to-pay” or “wave-to-pay” technology. You do not need to log in to any websites and you can pay for your purchases by simply waving or tapping your phone. Mobile Wallet could also be a credit card reader (app) that has been pre-loaded into your smartphone or tablet, and you pay for goods without ever pulling out your wallets or phones. In some systems, face recognition technology forms a part of the package, such that when you walk into a store (located in the network), a register shows the picture of your face, which is used as authentication for payment.
Working with the major credit card companies (Visa, MasterCard, Discover, American Express), Google developed its Wallet app, which lets you pay for items at selected stores by waving your phones. This app is available only for Android devices and at selected stores.
Isis is an outcome of a collaborative venture between America’s largest cell phone carriers: T-Mobile, Verizon, and AT&T, that allows you to pay for transactions at the counter by tapping on your phone. You will need an NFC-enabled smartphone to use the system and will also require a SIM-based “security element.”
Online wallets
Online solutions such as PayPal or Google Wallet provide you with online mobile options. For your first payment, you register and enter your phone number, to receive an SMS containing a PIN code. You simply enter the code into your phone to authenticate your phone number, after which you enter your credit card information. You only need to enter your Pin for subsequent payments.
QR Code payments
Quick Response (QR) codes are two-dimensional barcodes designed to contain meaningful information such as text (messages) or a website URL, which you can quickly load into your smartphone.  A few companies have recently introduced mobile shopping based on QR codes and standard card payment procedures. Such apps utilize QR codes as an open format for a payment information exchange between buyer, seller, and the card merchant. That is, a messaging service can deliver QR codes which can be scanned for confirmation of payment by a merchant. This can also serve as an electronic ticket to cinemas or game shows.
SMS-based transactional payments
Here, you send a payment request by sending a text message (SMS) to a short code. A charge is applied to your phone bill or your online wallet. The merchant is informed of the success of your payment, for him to release the goods that you have paid for. The goods in these kinds of transaction are frequently of digital form: purchased music, ringtones, wallpapers etc., which the merchant can easily send to you electronically.
The main idea of this article is that there are several mobile payment methods.