Get the lowdown on mobile payments: what they are, how they work, and why they're essential for your debt collection business.
Mobile payments might be the trendiest of Mobile Commerce trends out there. It shows a massive reach and growth potential, as smartphones and other mobile devices have become the core of our financial lives.
But what exactly are mobile payments and where is it heading as a trend? Here is everything you need to know.
What are mobile payments?
Mobile Payments are purchases done by mobile devices such as smartphones and tablets. This type of commerce has been on the rise in recent years as more people use their mobile devices to access the internet and make purchases.
Benefits of mobile payments
Here are five benefits of mobile commerce that you should know about:
- It’s more convenient: Mobile devices are designed to be portable and always with the user, which makes them highly convenient for making purchases anywhere, anytime.
- It’s easier: mobile payment solutions usually provide a user-friendly interface that makes it effortless for consumers to find what they need and complete transactions quickly and easily.
- It’s more personal: It provides users with a more personalized payment experience by tailoring content and offers to their specific demographics, locations, interests, and instances. SMS, social media, and push notifications arrive right into the consumer’s palm, making it easier to reach them with your message.
- It’s more flexible: Mobile payment solutions offer flexibility both to customers and businesses. The user can make purchases on the go, while businesses can adapt their product offerings, pricing, and promotions easily to meet their clients' needs.
- Drives more sales: it offers a convenient, easy, personal and flexible customer experience, which ends up driving more sales for your business.
Challenges of mobile payments
There are three main challenges mobile payments faces, that make them different from desktop payments:
- Format: mobile devices have smaller screens than computers and are mainly used in their vertical position, so businesses have to design their websites and payment gateways to be user-friendly on these devices. Check out this article that talks about mobile-first web design.
- Experience: people often use mobile payments outside of their homes. In a restaurant, paying for transportation, sending money to a friend. The user experience completely differs from sitting down in front of the computer at your house while you sip a coffee, with all the time in the world to shop online. Businesses need to make sure that their mobile commerce solutions are up-to-date, fast and convenient for an on-the-go payment experience.
- Security: Mobile payment solutions access sensitive data like addresses, credit card numbers, or even pin codes, and have the duty to keep their users’ personal information safe by developing secure checkout processes.
Mobile payments examples
Mobile commerce
This means using smartphones or tablets to purchase products or services through apps and/or websites such as Amazon, eBay, or any other available eCommerce platform.
What’s interesting here is that this not only counts products or services like food delivery, or buying furniture for your home, but also the purchase of digital items like the ones you find in mobile games.
The gaming industry is a pioneer in the development of mobile payments, seamlessly adapting digital payments into the gaming experience. Games like Clash Royale, Fortnite, or Free Fire are great examples of what a truly immersive mobile payment experience should look like.
QR code
A Quick Response code (QR) is a specific type of barcode that can be read by devices like smartphones and tablets. When used in mobile payments, QR codes provide a quick and easy way for customers to pay for goods and services, as a simple scan will direct the customer to a personalized getaway with the amount they have to pay.
Payment links
While QR codes are thought to be used in-store, payment links offer a similar experience but give access to a remote payment experience. From anywhere and at any time, customers who click on a payment link will be taken to a page where they can enter their payment information and check out.
Direct Operator Billing
Direct Operator Billing is a way for customers to purchase digital content on their mobile devices using their mobile phone number. Customers will see the charges for these purchases on their mobile phone bill.
SMS
SMS payments are mainly used to pay for subscription-based products. When a client signs up through SMS by text message or short code, the cost is either charged to their phone bill or deducted from their prepaid credit.
Contactless payments
A contactless payment is one that is made with the help of near-field communication (NFC) technology. It allows devices to exchange data using radio waves. While it is not a new technology in credit and debit cards, contactless payments through mobile phones and smartwatches are on the rise.
Mobile finance
Mobile phones have turned out to be one of the most convenient and secure ways of managing your finances.
While they took a while and still could use some updating, most banks have developed apps that let you easily access your account to check your balance or make transfers. These apps commonly use two-factor authentication methods with biometric security (using your face or fingerprints as passwords) to make mobile banking as secure and easy to use as it can get.
At the same time, with the rise of interest in stock and crypto investment, millions of users manage their portfolios from the comfort of their mobile devices, thanks to investing apps like eToro or Binance.
The role of mobile wallets in mobile payments
Mobile wallets are one of the main trends in digital payments, and one of the fastest-growing markets at the moment. We are seeing how tech giants like Apple, Google, WeChat, and Alibaba are investing hundreds of millions of dollars in their development.
They are the most convenient and secure touchpoint between clients and businesses, as they offer a safe way to store your money while giving you endless possibilities to make or receive payments.
As a customer, a mobile wallet lets you pay online and offline, use QRs, payment links, contactless payments, make transfers, and more, all from the palm of your hand and without carrying any cash.
As a merchant, you can offer a variety of mobile payment methods so you don’t lose sales while avoiding dealing with cash and safely storing the profits digitally.
Mobile payments statistics
The Mobile Payments market is fairly new, but has shown substantial growth and doesn’t plan to slow down any time soon. Here are the stats to prove our point:
- Global smartphone users increased by 49.89% in 2017-2022.
- 83.32% of the world’s population are smartphone users.
- 79% of smartphone users have made a purchase online.
- mCommerce sales are expected to reach $710 Billion by 2025.
- Mobile Commerce represents 44.2% of retail eCommerce sales in the US.
- There are expected to be over 185 million active mobile shoppers in the US by 2024.
- More than 1 Billion users worldwide use their mobile phones for banking.
- The Mobile Wallet market is expected to grow to 5.4 billion users by 2026.
A glimpse into the future
While it can be difficult to believe, mobile payments still have plenty of room to grow and a bright future ahead.
The next big trend already forming in the space is called Conversational Commerce, mainly pushed by Meta.
Conversational commerce is an omnichannel communication method where businesses leverage conversational AI to sell their products or services directly to the consumer through Social Media DMs, SMS, and other text-based communication platforms like WhatsApp, Telegram, or WeChat.
This allows for an automated but at the same time personalized payment experience, where people can interact with a human-like chatbot that assists them in buying products, tickets, subscribing to services, making or canceling appointments, and more, without interacting with a human or leaving the chat.
Conclusion
You may think that everything is already developed and there’s not that much value left to offer, but you’d be surprised by how many businesses in the space still struggle to design a high-quality mobile payment experience on their site.
Mobile offers a wider range of possibilities than desktop, and in the same way that today’s wave is conversational commerce, there will be many other trends awakened by this new way of experiencing payments.