Mobile money: a quick guide

Jamillah Knowles

Mobile wallet

A method of payment performed over a mobile device, such as a smartphone or tablet, is known as a mobile wallet. It could be checking your bank balance, buying goods or transferring money. Mobile banking is more convenient in countries that do not have banking systems readily available to a lot of the population. Mobile payments are set to reach US$600 billion globally by the end of this year, according to Juniper Research.

Transactions can be made in a number of ways, including mobile web payments, direct operator billing, contactless near field communication and SMS transactional payments.

Mobile web payments

These are made when a consumer pays for something over a mobile web page or application. This can be via services such as Amazon payments, PayPal or Google Wallet, where a credit or debit card is connected to the account and a separate password, or PIN, is used to make payments. These easy ‘one-click’ methods are often more suitable for mobile devices, where inputting lengthy card or identification details may be difficult and insecure.

Direct operator billing

Carrier or director operator billing (DOB) involves agreements with a mobile provider. Billing is established through an existing account and purchases are added to the phone bill. This system requires no further registration, provides a more secure payment method and reduces costs for merchants and customers.

Contactless or near field communications

The mobile device itself becomes a payment instrument with contactless or near field communications. A chip in the phone is identified by a reader, which picks up payment and identification details. Not all mobile devices carry NFC technologies, but banks are working around this. The spread of NFC payment technology has been slow, however.

Short messaging service (SMS)

SMS transactional payments work by sending a text message to make a purchase. Charges are applied to the operator bill or an online wallet with a prepaid balance or credit card attached. Example: Starbucks customers can download an app with a store card attached, choose their beverage and generate a bar code read at the till to make payment.

Square and other new applications

New applications and surrounding services are evolving. Square – an application with a card-swiping device that fits into the audio jack of a cell phone or tablet – automatically generates accounts for each transaction. Receipts are emailed to consumers.


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