What is a Mobile Payment?

Christine Hudson

A mobile payment is an alternative to cash and debit card payments when buying goods or services. Typically associated with games, ringtones and electronic goods, a mobile payment option allows a consumer to purchase something and have the purchase amount added to his or her mobile phone bill. This works as a convenient way for individuals without a debit or credit card to take advantage of the “buy now, pay later” attitude of modern commerce.

People can use their mobile phones to make purchases online.
People can use their mobile phones to make purchases online.

In the past, many people struggled with carrying cash, as it could easily be lost or stolen. Other times, people simply preferred not to use credit cards online. Even though most websites are encrypted, this is still a security gamble. As payment methods such as paper checks become more and more obsolete, the mobile payment method has grown rapidly in the e-commerce industry.

Mobile payments, enabled by banking and money-transfer apps accessed on portable devices, are an alternative to making purchases with checks and credit cards.
Mobile payments, enabled by banking and money-transfer apps accessed on portable devices, are an alternative to making purchases with checks and credit cards.

There are millions of people who use a mobile cellular phone and many of them will also order services and products at some time in their lives. As technology booms, more goods are purchased via the Internet on a daily basis. By offering mobile payment options, a merchant can effectively tap into a larger buying market and make more money. This is very low-risk for the merchant, as charges are paid by the mobile phone provider and then added onto the consumer’s next bill.

Although the mobile payment option has allowed merchants and consumers more flexibility, problems have also arisen. These issues have mainly been with underage or unauthorized users making large purchases using this method. For this reason, some companies have implemented options for disabling mobile payments on certain plans of phone numbers. Pre-paid cell phone plans usually do not allow mobile payments.

Businesses who would like to use a variety of different ways to reach their customers may consider offering the option of mobile payment. By offering mobile payments, visitors will be able to use the technology contained within a mobile cell phone to buy their favorite item. The market for these payments is also expanding to include tangible goods such as clothing and gifts, making e-commerce that much more convenient. As the industry grows, experts predict that the mobile payment will become a common feature on a vast majority or online merchant websites.

Retailers are developing apps for customers to pay for items in-store without the need for money.
Retailers are developing apps for customers to pay for items in-store without the need for money.

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