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Payment Processing

A Quick Overview of Mobile Payment Processing Solutions

Mobile payment processing is different from card processing as it involves a phone instead of a physical card. Customers own their resources

Cambry Nelson
7 months ago

Mobile payments bring two priorities of payment processing into one solution, namely: user convenience and safety of online payments. With the introduction and risen popularity of new tools such as Apple or Samsung Pay, it is not surprising that mobile payment processing has become increasingly popular. The benefits of this type of payment method applicable to both customers and business owners. Clients enjoy quick completion of transactions while businesses collect money securely in a short time period. If you have not started using mobile payments, this article will be particularly helpful. We will explain the vital points of mobile processing in this overview for a few minutes. 

How Does Mobile Payment Processing Work?

Mobile payment processing is different from credit card processing as it involves a phone instead of a physical card. Customers own their resources on mobile phones. On the other side of the chain, there are businesses with tools to accept payments such as NFC-enabled (Near Field Communication) POS terminals. Both devices in the customer’s and business’s side utilize Radio-frequency Identification (RFID) technology. RFID automatically identifies the tags of objects with the help of electromagnetic fields and transfers encrypted information. This technology initiates transactions between two parties in seconds. Buyers need to put their mobile phones very close to these devices to let the transactions happen.

Additionally, they should enter a passcode or use a fingerprint to verify the operation. Next, a microprocessor chip transfers authorization right to the business’s NFC modem. This chip is called the Secure Element, which stores sensitive data. 

Mobile Payment Types

Different forms of mobile payment solutions exist. The most popular types are mobile wallets, NFC, MST, QR code, or Mobile-to-mobile payments. 

Mobile Wallet

This payment method happens through secure apps on our mobile phones. Users should download a mobile wallet to their gadgets to enjoy the benefits of safe and convenient transactions. You can find various applications for mobile wallets, such as Google, Android, or Apple pay. 

In general, users need to input their card details into the application. Therefore, the mobile phone turns into a virtual cardholder. Also, these wallets ensure the security of sensitive data. They utilize a tokenization method, which sets a 16-digit card number into a random ID. As explained before, again, users need to hold their phones close, almost two inches, to the point-of-sale terminals of the businesses. However, these terminals should enable NFC to accept the transaction.

Near Field Communication (NFC) Payments

mobile payment processing

Mobile payment processing also works through NFC-enabled gadgets. NFC is essential for mobile wallets or other contactless payments to initiate. It requires proximity of both devices, around four centimeters, to transfer information. However, both gadgets should have NFC chips. As mentioned before, if a client uses a mobile wallet, the business should get an NFC enabled POS terminal to accept the payment.

Magnetic Secure Transmission (MST) Payments

MST payments work similarly to credit card payments because it uses a similar magnetic connection. Like NFC, it transfers information between two devices, usually buyer’s phone and business’s terminal. However, it uses magnetic signals. 

Mobile payment processing through MST has both benefits and drawbacks. The main advantage of this payment method is that it does not require additional functions. It means MST works just fine with most of the NFC-enabled terminals and other readers, which does not demand a card insert. Small businesses with MST payments also do not need to go through various upgrades. 

While its popularity is spreading, this mobile payment has not yet become universal due to some disadvantages. One of the drawbacks of this technology is that a small portion of banks or card issuers support this payment. Plus, Samsung uses this technology exclusively, while Apple Pay only supports NFC payments. 

Quick Response Code Payments

This type of payment uses a matrix barcode to transmit data. This barcode has horizontal and vertical patterns. When customers use QR codes, their smartphones decode the barcode with the help of the camera. It turns the barcode pattern into a character string and performs actions such as opening alike, verifying payment, etc. 

QR code payments can happen in two ways. In the first one, customers use smartphone cameras to scan a QR code. Then they verify the transaction in the unique application. Alternatively, businesses scan QR code from the smartphones of customers to complete transactions. 

Mobile Payments through Number

Mobile payment processing is also possible through a mobile number. This method supports quick and secure handling if both parties subscribe to the same party. As a result, buyers sign in for mobile-to-mobile payment and then either send or receive payments. 

Benefits of Mobile Payments

The term ‘mobile’ already indicates the advantages of such payments as users can use this technology wherever and whenever they want. Firstly, it is fast. Scanning an NFC payment or decoding a QR code takes only a few seconds. Second, this payment processing is secure. Users keep all data on their phones in an encrypted way. Methods like encryption, tokenization protect sensitive data. As a result, service providers reduce the chance of being a victim of fraudsters. Lastly, mobile payments are convenient. There is no need to carry all the cards or take them from the wallet. All necessary information is in one place, your smartphone. 

How to Implement Mobile Payments in Businesses?

mobile payment solutions

Mobile payment processing in businesses brings many conveniences, but it requires several factors to be present. Specifically, a piece of equipment, technology, and service providers is needed to accept mobile payment solutions from customers. 

Let’s start with the equipment. Usually, a service provider supplies the necessary equipment to your business. As a result, you get a scanner to read NFC, MST, or QR codes. It is better if a service provider can provide several options that require various levels of investments. In this way, you choose the most suitable equipment for your business. Also, it is a common practice that when you get a POS solution for your organization, it involves a function that accepts mobile payments. Yet, your business might need a little configuration to use the payment function smoothly. 

Next, you need specific technical features to support the acceptance of payments. For instance, if you get a POS terminal, it should be NFC-enabled to receive mobile payment solutions. The security of the transaction is also important. Therefore, your tool for payment processing should be able to encrypt data or utilize tokenization to protect sensitive information. Lastly, you need a reliable and professional service provider to deliver the other two factors, equipment, and technology. Besides, delivery of necessary elements, service providers should provide maintenance, upgrades, extensive customer care, or customized packages for the business clients.  

Summary

In this overview, we aimed to explain the critical aspects of mobile payments. While it may sound complicated, mobile payment processing is more convenient, fast, and secure. Both customers and businesses reduce waiting time and finalize transactions in a few seconds safely. To complete a transaction, businesses need terminals, and clients need mobile phones. Only by holding a mobile phone close to the terminal, data is transmitted. We also discussed several mobile payment methods, including NFC, MST, QR code payments, or mobile wallets. These are the fundamental payment solutions, but there exist other types, too. If you decide to use such payment processing, it is also advisable to be familiar with the details of your preferred method.