Business consultancy project

Mobile Payment Technology

Mobile Payment technology is divided into proximity and remote payments. Proximity payment technologies enable the contactless payment within the assistance of radio technologies when both parties are physically in the same location. Remote payments technologies can handle the payment process independent of the payer’s location, by using a communication tool SMS, or a mobile application. (Mobile Financial Services terms explained, 2013)

1. 
   Point of Sales Payment System (POS)
   

Mobile POS payment allows consumers to purchase goods and services in retail stores through vending machine and payment terminals. However, the POS payment system has different types of the payment system in its turn as well:

1. 
   Near field Communication (NFC) payments.
   

One of the mobile POS payment forms, which is widely used in the developed world is NFC payment. For the NFC payments, the mobile device must support NFC, and while making a payment, the phone communicates with the NFC-enabled card machine by using close-proximity radio frequency identification. Comparing with chip and Pin technology NFC creates a direct and immediate transfer of encrypted data to the point of sale. The consumer is not required to enter the Pin code and use some verification tool; he /she must wave the mobile phone over the POS terminal. In fact, in some cases, contactless payment is divided into micro and macro payments, where for macro payments consumer must wave phone twice for verification. (Pasquet, Rosenberger, & Reynaud, 2008) NFC has some benefits over a traditional card payment. First, the information is being transmitted immediately, and the second one the payment can be made when the mobile device is close to the payment machine. Besides, data transmission is highly secured. The data encrypted when the information is sent to the NFC reader where the token decrypted. (Gullien, 2017), (McCarthy, 2008)
Apple-Pay and Google-Pay support the NFC payment model. Also, the smartphone companies are implementing NFC technology in their devices, and the number of smartphones supporting NFC technology is steadily increasing.

2. 
   Sound wave-based (or sound signal-based) mobile payments
   

In this form of money transfer, the existence of the internet is not required, as the transaction is being proceeded through unique sound waves by containing encrypted data about payment. The transaction occurs by receiving a sound wave from terminal to the mobile phone, where the payments details information is converted to the analog signal and finalize the payment process. Sound wave-based technology is more usable in the region where smartphone penetration is not high, as there is no need for extra hardware, and a card terminal requires simple software installation. (Entrepreneur, 2017), (Mobile Payment Industry Overview)

3. 
   Magnetic secure transmission (MST) payments
   

MST payment is when the magnetic signal imitates the magnetic stripe of the credit card and card terminal accept this information as if physical credit card swipes through the terminal. Some terminals do require a correct software update for accepting MST payments. Samsung pay supports MST payment technology. Like NCF, MST is using tokenization technology for the encryption card details and while receiving the information through NFC and MST bank creates the randomly created virtual cards details for each transaction. (Choi & Lee), (Sorensen, 2018)

2. 
   Both in store and remote payment
   
   1. 
      Mobile Wallets
      

The mobile wallet is an app that can be installed in smartphones. The mobile wallet can apply different m- payment technologies. Due to the fact, that not all mobile devices have NFC technology, and, in this case, the mobile wallet allows to use the different information for payment. It keeps the information of payment cards and when the user puts the required information, and the payment information is being linked with personal information such as some keys, quick response code (QR) or an image of the owner to each card that is stored. The PayPal, Amazon Payment, Google Wallet can be considered as the examples for a mobile wallet. (Ghag & Hegde, 2012)

2. 
   Quick Response (QR) payments
   

QR code is a barcode, which consists of black squares that form the matrix in the white background. For every transaction, the seller must provide the consumer with QR code, and the consumer must scan the QR code by using a mobile device. The QR code contains all information related to the successful transaction, such as bill number, account, and bank details of sellers. While using the QR code owner must scan the QR code through the bank application, and the sum is deducted from consumer wallet after the application recognizes it. (Quick Response (QR) code, 2018)

3. 
   Remote Payments
   
   1. 
      Internet Payments
      

The consumer installs the additional application through a web page. It uses the WAP (Wireless Application Protocol). Together with benefits, it has negative sides as well. It is easy to follow on sales and store and share information, and the purchase is being made very quickly. However, the usage of application is not user-friendly and requires a desktop environment. (Types of Mobile Payments, 2016)

2. 
   SMS (Short Message Service) Payments
   

In SMS payment tool consumer sends a simple message and receive the specific code or password. The cost of the service is being added by the mobile operator to the monthly bill of the customer when it is a postpaid subscriber, and in case of prepaid - deducts immediately from the balance. It is a more appropriate tool for micropayment as it does not require any credit card information. (Sorensen, 2018)

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