As if it was not hard enough to earn money, technology and service providers make more and more easier to spend it every day by inventing new payment methods. Cash was out of the picture long time ago and people still find it convenient to make payments by credit cards, but with the new technology and emerging applications, soon we won’t need anything but our mobile phones to make any kind of payment.
While making other classifications is also possible, it would not be wrong to divide mobile payments into three categories:
Mobile Peer-to-Peer (P2P)
Peer-to-peer (P2P) payments, as with other peer-to-peer services like music-sharing, are informal transactions made between two people. Paying the babysitter and reimbursing a friend for your share in a lunch tab fall into this category. PayPal and similar services might facilitate this type of transaction (though PayPal, of course, can also be used for more-formal payments, such as eBay and other online purchases.)
Mobile Point of Sale (POS)
Unlike mobile P2P technology, which may use text or a software application to transfer funds, mobile point-of-sale (POS) is all about hardware. The cell phone becomes a wallet or payment token, the physical object that carries a radio frequency ID (RFID) chip or near field communication (NFC) technology. This could be an external sticker, or perhaps be integrated as a hardware component on the device. It’s this chip that communicates with the payment terminal to green-light transactions. Pros (other than eliminating the need for a physically carried wallet) and Cons of Mobile POS can be listed as follows:
– Location services help you find the best prices for an item and give you a coupon on the spot.
– The technology is moving toward storing travel ticket information and other important documents.
– You can analyze and control costs/budgets in real time.
– Not all retailers are on board yet.
– Only a select few phones currently have the NFC technology; however, that’s slated to change.
– There are concerns about security (more on that below).
Mobile commerce, or m-commerce as it’s sometimes known, uses the mobile handset as the gateway to online shopping. Instead of buying items from your desktop or laptop computer, you would open an app or the mobile browser and shop for everything from clothing to movie tickets to books.
Amazon and eBay are further moving into m-commerce, which has already successfully been proven in the U.S. with content stores like iTunes, Amazon.com MP3, and movie apps. Web sites that aren’t optimized for the mobile phone screen is one hurdle to widespread adoption that would be easier to surmount.
In addtion, to above three completely ‘soft’ version of mobile payment, one other category which has to be mentioned:
Mobile payments acceptance
Instead of swiping your credit or debit card through a separate machine at the ice cream shop or farmers market, what if you slide it through an attachment you can stick in a mobile phone? This is what’s meant by mobile payments acceptance, Square probably being one of the most popular companies in this field, whose small card-readers plug into the 3.5-millimeter headset jack on your Android and iPhone, and can then manage the transaction using an app.