What is Mobile Payment Processing and How Does it Work?

Mobile payment processing allows consumers to pay for purchases using their mobile devices. Mobile payment services include applications that allow customers to use their smartphones, tablets, or other mobile electronics in lieu of cash or credit cards when paying at the register. Some mobile payment services require that you have a balance on your account in order to complete transactions; these are called “prepaid services.” Other mobile payment services allow you to link a credit card, debit card, or checking account to their service. These are called “mobile banking services.”

The idea behind mobile payment processing is that it allows you to use your electronic devices in the same way they’re used to paying for purchases with cash or cards. In the past, consumers might have been asked to show a clerk their phone or mobile device when making purchases with cash or credit cards. Now, they can simply place their devices on a sensor that triggers payment processing.

Mobile payment processing typically uses a technology called Near-Field Communication (NFC). NFC allows customers to complete transactions by holding an enabled device (device that has NFC technology) in close proximity to the payment terminal and pressing a button when prompted. Other mobile payment services, such as mobile banking, use QR codes when completing mobile transactions.

What Are QR Codes?

QR stands for “Quick Response.” QR codes were created by Denso Wave Inc., but initially had nothing to do with barcodes or computers. Instead, they were developed in 1994 by Denso’s engineering division for use in its manufacturing processes. QR codes are two-dimensional machine readable graphical codes that contain information about the item to which they are attached. Because of their high data capacity, QR codes are used on everything from shipping labels and business cards to car parts and clothing tags.

QR codes are an alternative way of completing mobile transactions. Instead of using a phone’s NFC technology, customers can download a barcode scanning app on their device and scan QR codes on the payment terminal. This allows them to complete mobile transactions faster than if they had to place their devices on a sensor.

Are Mobile Payment Processing Services Safe?

Mobile payment processing is generally safe. However, like any new technology, they can introduce security vulnerabilities to your mobile device if you do not educate yourself about the latest threats. For example, bad guys have found ways to intercept transaction information sent through NFC protocols on some devices. Mobile banking services help provide security against man-in-the-middle attacks by requiring customers to enter a one-time password before completing transactions. Merchants are still responsible for protecting their payment terminals against hackers and other cybercriminals.