What happens in a mobile payment?

The first question is, are you using the consumers’ phone or not. Is the consumer physically present and looking to pay with their phone? If no, then this is a mobile point of sale.

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Mobile point of sale: best-known players in this market are Square, iZettle and the suchlike. They take the card terminal, shrink it down and allow it to associate with your mobile phone (your mobile phone is really just a computer). The problem they were really solving with mobile point of sale is less around mobility, although that definitely helps for scale, and more around expanding access to credit card acceptance. Because accepting cards as a merchant is quite expensive. Terminals are expensive, and there are a lot of fixed and ongoing fees. So the mobile point of sale has solved this problem by making taking card payments accessible to anyone with a mobile phone, and it works anywhere you have a data connection.

If yes, it is the customer who is using their phone to engage in payment, then we need to look at how this payment is made secure. The first option is security comes from the phone itself. Taking the phone, tapping it against something and making a payment is called ’Contactless’ or NFC. Near field communication – like when you tap into the tube in London.

If the secure element is not in the phone then we’re in the cloud. The key question here is whether you’re buying goods or services. If the answer is no, then we’re talking about mobile banking. Mobile banking belongs in its own separate category but gets lumped into mobile payments. Particularly big in the developing world where people can bypass bank accounts and use mobile banking to transfer money from peer to peer. Let’s pop mobile banking to the side for now.

If you are buying goods or services, then we’re talking about m-commerce or mobile commerce. This is where Judopay really focusses.

Under mobile commerce, the question really becomes: who has the customer account. If the customer account is held by the issuing bank or card schemes like Visa, Mastercard, American Express, Discover etc. that’s a mobile commerce card payment.

If the account is held by a mobile operator like O2 or Vodafone, then that’s called carrier billing. In this instance, the charge goes to your mobile phone bill.

Next, we have a bank transfer, like faster payments.

Alternative payment methods are next. The most well known is PayPal. Making an account with a different login mobile structure that allows for payment.

Finally, virtual currencies. Like Bitcoin, not tied to any bank or card or currency, a separate creation of a currency that can be used to purchase things.

For all of these instances of mobile commerce, it’s actually being funded by a bank transfer. If it’s a credit card, at some point you pay for it through your bank. If it’s an alternative payment method you have to top up your account either in advance or by automatically pulling funds from your account. The exception is virtual currencies, but even they need to be bought with money from your bank at some point.

What Judopay recommend is that you give only a few of these options at checkout that make sense for your business. The more options you give, the more you can expand your net to consumers. However too many options and it’s overwhelming and too much effort for the purchaser, you’ll lose people at the last step. Judopay can help you find the balance for your business.

For mobile payments, you have to provide the fastest, slickest, safest payment experience you can. Your customers are on the move, probably doing two things at once. The requirement to make this experience the best it can is more in mobile payments than any other payments arena. Judopay can help you create that killer mobile payments customer experience.

To sum up, the answer to these three questions will help you understand which part of mobile payments is being used: is the consumer’s phone being used, where does the security sit to make the payment secure and are you buying a good or service? Then you’ll know if it’s a mobile point of sale, mobile banking or mobile commerce. If it’s mobile commerce, come and speak to Judopay.