Online payments are advertised as convenient, secure, and fast. With a few clicks on your mobile device to the payment terminal, money is sent from your credit card to the receiver’s account. It’s almost like magic!
However, mobile payments are a lot more complicated than they seem. Making a payment with your mobile device is convenient and easy, no doubt, yet they can be quite expensive and subject to technological glitches. For instance, if there’s a problem with the host device, mobile payment will not work. Besides, the digital payment industry continues to engage in “format wars.”
If you wish to link your credit card to your smartphone but need to figure out what you are getting into first, then read on to discover all the pros and cons of mobile in-app payments.
The Emergence of Mobile Payments
Contactless payment wasn’t known until its introduction in 1995. The concept of cardless transactions birthed mobile payments. It became a phenomenon as it benefited both merchants and customers.
For the latter, the unique selling point was the eradication of the need to carry a wallet or purse, while for the former, the key feature is the convenience, ease, and efficiency it provides.
Also, the companies backing the mobile payment gain a lot as it provides a source of income and helps these companies gather data on every customer’s buying data. This data can sometimes be vital to making key business decisions.
Upon entering your card information for the first time, the app confirms your data with your bank and then issues a token that stands in for your details. During each subsequent transaction, the assigned token and a one-time-use security code are used to access the payment app. This secure method is a key component of advanced agency banking solutions, which enhance transaction safety and streamline payment processes.
How Mobile In-App Payment Works
Here is how most mobile payment work:
- The payment app is installed on the merchant’s mobile device and acts as a point of sale.
- The customer installs a corresponding app from the same provider
- The customer inputs their card details on their mobile device
- The customer completes the transaction, and the money gets to the merchant
Benefits of Mobile In-App Payment
When digital in-app payments work as they should, you can make in-app payments straight from your mobile device. Other perks of mobile payment include:
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Blazing Speed
Completing a transaction with mobile in-app payment is super-fast; it can be done in mere seconds. All that’s required is to tap the relevant buttons on the mobile device to the payment terminal and confirm the transaction (this typically involves inputting your pin or fingerprint). Just like that, the merchant receives the money, and you receive your product. It removes the need to search your wallet, inscribe your signature, or swipe any card.
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Mobile In-App Payments are Safe and Secure
Most mobile in-app payments are secure with tokens; this means the payment companies do not give out your credit card details nor store your data. Upon entering your card information, the first time, the app confirms your data with your bank and then issues a token that stands in for your details. During each subsequent transaction, the assigned token and a one-time-use security code are used to access the payment app. Hence, even if a hacker gets a hold of your device, they cannot access your credit card.
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More Physically Secure
Not only is mobile payment secure online, but they are also physically secure. Unlike credit cards or cash which can be stolen, mobile payment uses biometrics or passcodes to guide against impersonation, theft, and so on.
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Compact and convenient
Carrying cash or credit around can be stressful and even dangerous. But for Mobile in-app payment, everything you need to make a transaction is on your phone. For added convenience, you can link your credit card to your smartphone and use it to send money online, eliminating the need for physical cards or cash.
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Universally Accepted
Many prominent retailers accept some form of mobile payment, even though it may not be the one you use. But if you stay in an urban region, chances are there will be a lot of mobile payment options to choose from.
Great Reward system
Some digital wallets also have a great reward system, enabling users to add reward cards or store loyalty. Upon making an online purchase with the credit card, it will automatically connect the transaction to your reward system. Hence, you get all the perks of a reward program without purchasing a credit card.
Drawbacks of Mobile In-App Payment
Once you get used to mobile in-app payment, you may not want to return to signing receipts after every transaction or digging through your wallet. However, there may be times you will need to, as mobile in-app payment has its challenges. The cons of digital payment include the following:
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Easy to Track
With digital payment, every transaction leaves an online footprint that can be traced back to you. This is a major concern for people keen on their privacy, especially since there are many hackers lurking around.
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Partially Accepted
Although many retailers accept digital payments, many do not accept mobile in-app payments. According to a survey, while PayPal is the most popular payment gateway, only 36% of retailers in North America accept it. Also, 22% of respondents say they will accept other payment gateways in the coming year. Regardless, more than 40% won’t accept digital payments.
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Selective Acceptance
Even if some stores accept mobile payments, not all stores will accept all mobile payments. One mobile payment may be accepted in one store but may not be recognized in another store. Still, some stores (like big stores) only accept mobile payments from their payment platform.
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Only Supported by Certain devices
Most online payment system uses NFC (a type of technology) to send transaction information to a payment terminal. However, not all mobile devices are designed to support the feature.
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Payments Are Linked to Your Mobile Device
Most mobile payments are tied to your device; hence, if your phone gets stolen or lost or the battery dies, you will not be able to purchase an item. Besides, like all electronic devices, mobile payment requires a charged battery to make a payment.
Bottom Line
While many payment options are available to customers, mobile payment is the most preferred as it provides a convenient shopping experience. There are benefits no doubt, yet there are some drawbacks and the knowledge of everything will help you determine the payment method to adopt.