9 Mobile Payment Terms you need to know
You’d leave home without your wallet, but never without your smart phone.
If this seems like you, then you’re not alone. In fact, the majority of people would go back home to get their phone, but not their wallet. This personal connection we have with our phones is one of the reasons why in-store mobile payments are quickly gaining share of wallet among retailers. For consumers, mobile payment solutions are secure, convenient, and with a double layer of security, very safe.
In Deloitte’s 2015 annual research report on the Technology, Media, and Telecommunications (TMT) sectors, they predict that in-store mobile payments will increase by more than 1,000 percent worldwide this year.
So if your not already knee deep in implementing your mobile payment strategy, here are 9 key terms from the mobile payment solution space that you need to know to start using these consumer friendly mobile payment solutions to enhance customer satisfaction, reduce costs and mitigate fraud.
1. Mobile payment
A mobile payment is a retail transaction, at a store or via ecommerce, that is either made or received with a mobile device. Mobile payments are gaining popularity with consumers at large because of their convenience and security (see two-factor authentication). Not only do consumers always have their mobile devices with them, but the mobile device becomes the security token for each transaction (and has a double layer of security) and credit/debit card data is not saved within the POS system.
2. Security token
In a mobile payment process, the security token is a the user’s mobile device they use to authorize access to a payment gateway network. In mobile payments, the security token is the user’s mobile device and provides an extra level of security through two-factor authentication (2FA).
3. Digital Wallet
A digital wallet is a software application, to create a user-friendly, mobile and secure payment experience, that serves the same function as a physical wallet. Because digital wallets are on devices that connect to the Internet, they may carry multiple numbers of security tokens, other information such as loyalty programs, discount programs, electronic health records (EHR), promotions from stores and coupons (see open mobile wallet).
4. Two-factor authentication (2FA)
Two-factor authentication is a security process in which the user provides two means of identification, from separate type of credentials, in order to initiate a payment. 2FA drastically reduces fraud because the user’s mobile device is deemed the physical token, and the other authentication can be a password, fingerprint recognition, facial recognition, iris scanning or voice recognition.
Beacons are specific to wireless networks and transmission a continuous stream of small packets that attempt to connect with mobile devices to establish a presence. Beacons can carry promotional material or informational messaging that is most relevant to the customer at their specific time and location.
6. Proximity payments
Sometimes more known as contactless mobile payments (CMP), proximity payments are made without making any physical contact between the two parties of the transaction. Made within small distances, examples of proximity payments as paying at retail location, holding two phones near each other to transfer money between two friends or paying your metro ticket by holding your phone to a reader.
7. Remote Payments
Remote payments are transactions conducted over the internet, and can be made independently of the payer ́s location and his/her equipment. An example of mobile payments would be scanning a QR Code from a webpage in an ecommerce transaction or by paying a utility bill from a website. The mobile device is often used to authenticate personal information from a resident software application or a mobile web browser.
8. Payment Service Provider (PSP)
Payment Service Providers offers merchants services and the technical platform for accepting mobile payments – essentially the link between the merchant and the bank. PSPs can connect to multiple acquiring banks, card and payment networks and fully manage the technical connections and relationships with external networks and banks. This makes the merchant less dependent on banks by establishing these connections directly.
9. Open mobile wallet
Many industry insiders believe the future of mobile payments will be open mobile wallets as the user can store multiple categories of information in their mobile wallet, just like consumers do today with their physical wallets.
Are you ready for the volume of mobile payments? Your customers sure are.