10 Mobile Payment Innovations – Are We There Yet?

While there’s no doubt that consumers are increasingly using their mobile devices to access the Internet, there is still reluctance amongst many to make mobile payments. Research by the Mobile Marketing Association indicated that while 59% of consumers will use their smartphones to research product purchases this Christmas, only 13% intend to complete a purchase transaction via a mobile device.

Top Mobile Payments Innovations include Cimbal's Proximity Payments Solution
Top Mobile Payments Innovations include Cimbal's Proximity Payments Solution

Few online retailers have made the leap to mobile commerce, fearing that the market is not there yet. However there is a chicken and egg situation here. If retailers offer an incredibly easy-to-use mobile transaction services plus reassurance around security, customers will start to use those mobile services in larger numbers.   There’s no point waiting for customers to be ‘ready’ unless they’ve been given the opportunity to ‘try’.

The mobile payment space is ripe for innovation. Here are ten great examples of how mobile payments are being made incredibly easy for customers:

1. Full M-Commerce Website – Amazon

Amazon provides a full mobile version of its main website. You can browse their full catalogue and then purchase by simply inputting your account password or by using Amazon’s one-click shopping option. However Amazon does also enable you to input credit card details using https encryption – the same encryption method used on their main website and every other secure shopping website. Amazon provide a mobile app for iPhone and Android users which offer improved user experience and the same levels of security.

2. Music & Apps – iTunes

Apple (and the other mobile app stores) are successfully driving mobile purchases through previously created accounts. Set up your iTunes or App Store payment details with your credit card via a computer and then you only need to enter a password on the mobile device to purchase.

3. In-App Payments – PayPal

For many digital businesses, particularly within the gaming sector, payment via previously downloaded mobile applications is critical. The customer may initially download for free or through an App Store payment, but will then be encouraged to make additional payment from within the app. Some developers create their own facility to handle financial payments but others are integrating with in-app payment libraries from third-parties such as PayPal and PlaySpan.

4. Mobile Funds Transfer – Venmo

New mobile services are emerging that enable individuals to transfer money directly to each other’s bank accounts. Venmo allows users who have linked their bank or credit card account with their Venmo account, transfer funds via iPhone or SMS with other Venmo users. Irish start-up Carapay looks set to do something similar but will also facilitate consumer to merchant payments.

5. In-Store Mobile Payments – Starbucks

Starbucks get mobile because they get their customers. They use mobile location-based social networks such as Foursquare to drive repeat custom. But they also facilitate in-store payments using QR codes generated from via your mobile phone. Each store is equipped with a QR scanner. Upon scanning the code, payment is deducted from the customer’s online account and their loyalty points are also updated.

6. Proximity Payments – Cimbal

Cimbal is an innovation that combines direct funds transfer and QR codes. A merchant dynamically generates a QR code via a mobile device, a webpage or an in-store device. The customer/payer then scans this QR code using the Cimbal application on their smartphone to authorise payment for the appropriate amount. This amount is then transferred from their account to the payee’s account.

7. Physical Card Mobile Payments – SquareUp

Twitter founder, Jack Dorsey announced the launch of his new venture earlier this year at TechCrunch Disrupt. SquareUp enables U.S. merchants take payments using a card-reading dongle attached to a smart phone. Swipe your card through the dongle and sign using your finger on the phone. On this side of the pond, U.K. company CardEase is working on bringing a chip and pin solution to the market using Blackberry smartphones.

8. Mobile Operator-Facilitated Payments

Mobile operators have been facilitating third-party provision of paid  content for a long-time. Payment for SMS and MMS delivery of content such as ringtones, games and wallpapers is processed by the operators and added to a customer’s monthly bill. Increasingly other more traditional services can also be purchased via intermediaries such as ImpusePay who negotiate deals directly with the operators.

9. Pay with Your Phone Number – Boku

Boku is an innovative service that takes all of the hassle out of mobile phone payments. Since everyone has a phone number, Boku enable customers to avoid having to register an account or input credit card details anywhere; by simply inputting your phone number. An SMS is then sent to your phone and you simply text Y to confirm payment. The amount is added to your monthly phone bill.

10. Smartphones Replacing Plastic?

Watch the operator space as mobile operators look set to challenge the credit card companies for a slice of their market. In the US, mobile operators are collaborating to develop a solution that enables customers to pay for products via their smartphones, and in so doing are bypassing the major credit card companies. Merchant rates will have to improve, but there is certainly massive untapped potential in the mobile payments arena.

The question to ask yourself is NOT “Is the market ready for mobile payments?” BUT “How can I make it incredibly easy for my customers to pay for my product/service via their mobile?” And for those concerned about security, check out why eBay CEO thinks that mobile is the safest way to pay.

8 thoughts on “10 Mobile Payment Innovations – Are We There Yet?

  1. Excellent summary, and really highlights the point that there is no agreed definition of “mCommerce”. Ask ten people, and you’ll get ten different (but valid!) answers, as each of the ten examples you give could be considered to be elements of mCommerce.

    One point on “in-app” payments – you mention PayPal & PlaySpan, but this capability is also offered by WorldNet, a Dublin-based eCommerce/mCommerce Payment Gateway (dislaimer: I work for them).


  2. Interesting article. I feel you missed out on in-app payments as supported natively by Apple for iPhone and iPad. Currently, this is limited to the sale of digital goods, so is used (for example) to sell new levels on games.
    The statistics for in-app purchase are pretty interesting; It provides a great way of converting people from your “free edition” to the “full paid edition” within the app.

    Of course, it is still subject to an Apple tax of 30%.

    The big problems for electronic commerce has always been about transaction cost. As long as the transaction cost is too high, micropayments will remain infeasible. Hence why stored-value platforms are often hailed as the answer – these store value, which is deducted without a costly round-trip to bank; and loaded with value once depleted. The loading is done in conjunction with the bank, but with a higher value, it becomes economic.

    I think the world is waiting t see how SquareUp fares. I saw Jack Dorsey speak a couple of weeks ago, and he glossed over the fraud issue saying “yeah we know its there, but we’ll deal with it”.


  3. @John. Hadn’t heard of WorldNet so thanks for mentioning.

    @Dermot. Yep those kinds of margins going to operators or facilitators is completely unacceptable unless you are in the digital goods space. Very few physical product providers could afford to give 30% to someone just to facilitate payment. This will have to change if mCommerce is to become more widespread; and this is the opportunity for new market entrants.

    @Des. Good idea, but would this be less secure – I could photocopy your QR code and then scan it wherever I want? Perhaps an alternative would be to look at RFID technologies – chips embedded in your credit card or mobile phone that once placed ‘near’ a scanning device are read using radio frequencies. There are some solutions already in the market – check out what Zapa are doing for the Insomnia coffee chain (http://www.zapatag.ie/zapa-news/18-zapa-insomnia.html)


  4. The reason to embed payments into iPhone Apps is to avoid the 30% to 40% charged by Apple. The embedded payment solution takes the payment out of the Apple payment ecosystem, and means the merchant pays the same fee as for any eCommerce transaction (typically 2% to 3%).

    Obviously this hugely opens up the type of goods that may be sold via an App – if you can sell it via a web site, you can now sell it via an App, if you use an embedded payment solution.


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