Mobile Payment in the present and future

Mobile Payment

Even though payment in some way has always been in motion, since the time of the exchange of goods (17000 years BC), through the use of coins of precious metals (700 years BC) until the first appearance of paper money (960) or use payment cards (1921), or the first appearance of a modern credit card (1958), the concept of mobile payment primarily refers to the process of payment of various goods and services, where the mobile device is used for authorization and confirmation transactions themselves.

Where were we yesterday?

The first appearance of a service in the world that enabled mobile payment of goods and services occurred in 1997 when Coca Cola in Helsinki introduced a beverage vending machine where users could pay their beverage by sending an appropriate SMS message. At the same time, the oil company Mobil has offered an RFID device in the form of a key ring (called Speedpass), which allowed users to pay fuel on their gas pumps by slipping the device near the sensor on the pump itself.

These two services were the pioneers of mobile payment, which launched an avalanche of similar services in the coming years around the world. The vast majority of these services were based on the SMS or USSD communication of the users with the backend system, and payments were made through a mobile account linked to the user’s mobile device, whereby payments were limited to smaller amounts (so-called micropayments). Especially popular were the sale of pictures and melodies for mobile phones.

One of the largest mobile payment systems in the world, based on SMS / USSD technology, which offers different types of micro and macro payments (payment and cash withdrawal, transfer of funds to another user, purchase of goods and services), was launched in 2007 by the company Vodafone in cooperation with telecom operators in Kenya and Tanzania (m-beet system). In the meantime, the system has expanded considerably among other developing countries around the world and is currently used by tens of millions of users.

How are we doing today?

The first appearance of smart mobile devices in 2007 changed the way the mobile payment service was used since the user with such a device offered a completely different perspective of using the service. Since then, they are no longer SMS / USSD technologies (except in developing countries, where they are still current), but the market has been flooded with mobile internet and mobile applications that have brought a completely new user experience in mobile payments.

Over the past few years, the main discussions have led to what is the best technology for communicating mobile applications with sales outlets, i.e. how to simplify the process of purchasing the user, while at the same time achieving the required level of user data security. Although there were doubts about its feasibility and applicability in practice, NFC technology proved to be one of the best choices in the field, because it allows so-called. contactless payment and provides a high level of security. That’s the case, the three largest mobile payment systems (Apple Pay, Android Pay, and Samsung Pay), which are currently in the expansion worldwide, which relies on NFC technology and related mobile applications, testify.

All three of these systems function in a similar way. Paying at the point of sale is initiated by tapping a mobile device in the vicinity (less than 10 cm) of the corresponding NFC terminal on the output box, after which the payment process takes place as well as when paying with a bank card. At that moment, the mobile device is a bank card, whereby the NFC protocol sends the necessary card data to the output NFC terminal. To achieve a high level of security, mobile applications use a security feature (chip) built into the mobile device itself, which stores the necessary card data for user authentication at the point of sale. On the mobile device, no bank card numbers or any other sensitive card data are stored, tokens representing a pre-registered card. Tokens issue associated card networks (Visa, MasterCard) and they are valid only on this mobile device.

Statistics show that in the United States alone, in the USA alone, through mobile payments at the box office (contactless payment), a turnover of around $ 9 billion was realized, an average of $ 380 per user who in 2015 used some form of mobile payment.

What brings us tomorrow?

While it is still considered an alternative form of payment, whereby the buyer, instead of the usual means such as cash or bank cards, uses his mobile device, which he uses for other everyday purposes, for the payment process, mobile payment has all the prerequisites to become the primary form of payment in the near future. Apple’s announcement that Apple plans to expand its Apple Pay system to the entire European market in 2016, is also in the pipeline, with Google and Samsung definitely not going to stand still. It’s just 2016 that is marked as the year in which the entire ecosystem of mobile payments will be transformed. According to Gartner, 50% of customers in the advanced world markets are expected to use their smart mobile payment devices by 2018, and that the volume of payments itself will increase by more than 300% compared to the current one. In addition to smartphones, which have already become an irreplaceable part of everyday life, when it comes to mobile payments in the near future, then we should certainly talk about other smart mobile devices, such as wearables, smartwatches and other smartphones things that will soon become our everyday life.

With the actual use of tokens instead of bank card numbers, the user authentication process for mobile payments will surely rely on various biometric characteristics of the person. The fingerprint is already in use, and other methods of recognizing human characteristics that are applied in some other industries (eg speech recognition, face recognition, heartbeats, eye irradiation, and the like) will certainly be present in this area.

The common denominator of all these systems and technologies is the effort to make purchases of goods and services as affordable and simpler to all end users, bearing in mind that human habits are changing in accordance with generally accepted global trends.

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