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Small-business owners prefer getting money they’re due as fast as possible–who doesn’t? But not all modestly sized companies have the in-house tech staff or the budget to hire outside services to build payment platforms into their online sites.
As a workaround, a growing number of those firms are using third-party systems to accelerate some transactions up to real-time speed, paying fees similar to those charged for credit card processing, about 2 to 3 percent of the purchase value.…Story continues…
By: Bruce Crumley
Source: Study Shows More Small Businesses Using Instant Payment Apps for One-Off Transactions | Inc.com
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Critics:
Even as the volume of Premium SMS transactions have flattened, many cloud-based payment systems continue to use SMS for presentment, authorization, and authentication, while the payment itself is processed through existing payment networks such as credit and debit card networks. These solutions combine the ubiquity of the SMS channel, with the security and reliability of existing payment infrastructure.
Since SMS lacks end-to-end encryption, such solutions employ a higher-level security strategies known as ‘tokenization’ and ‘target removal’ whereby payment occurs without transmitting any sensitive account details, username, password, or PIN. Point-of-sales mobile payment solutions have not relied on SMS-based authentication as a payment mechanism, but remote payments such as bill payments,seat upgrades on flights, and membership or subscription renewals are commonplace.
In comparison to premium short code programs which often exist in isolation, relationship marketing and payment systems are often integrated with CRM, ERP, marketing-automation platforms, and reservation systems. Many of the problems inherent with premium SMS have been addressed by solution providers. Remembering keywords is not required since sessions are initiated by the enterprise to establish a transaction specific context.
Reply messages are linked to the proper session and authenticated either synchronously through a very short expiry period (every reply is assumed to be to the last message sent) or by tracking session according to varying reply addresses and/or reply options. Direct operator billing, also known as mobile content billing, WAP billing, and carrier billing, requires integration with the mobile network operator. It provides certain benefits:
Mobile network operators already have a billing relationship with consumers, the payment will be added to their bill. One of the drawbacks is that the payout rate will often be much lower than with other mobile payments options. Examples from a popular provider: 45 to 91.7 percent with operator billing in the US, UK and some smaller European countries, but usually around 60%.
More recently, direct operator billing is being deployed in an in-app environment, where mobile application developers are taking advantage of the one-click payment option that direct operator billing provides for monetising mobile applications. This is a logical alternative to credit card and Premium SMS billing.
In 2012 Ericsson and Western Union partnered to expand the direct operator billing market, making it possible for mobile operators to include Western Union mobile money transfers as part of their mobile financial service offerings. Given the international reach of both companies, the partnership is meant to accelerate the interconnection between the m-commerce market and the existing financial world.
Near-field communication (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer using a special mobile phone equipped with a smartcard waves their phone near a reader module. Most transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from a pre-paid account or charged to a mobile or bank account directly.
Mobile payment method via NFC faces significant challenges for wide and fast adoption, due to lack of supporting infrastructure, complex ecosystem of stakeholders, and standards.Some phone manufacturers and banks, however, are enthusiastic. Ericsson and Aconite are examples of businesses that make it possible for banks to create consumer mobile payment applications that take advantage of NFC technology.
NFC vendors in Japan are closely related to mass-transit networks, like the Mobile Suica used since 28 January 2006 on the JR East rail network. The mobile wallet Osaifu-Keitai system, used since 2004 for Mobile Suica and many others including Edy and nanaco, has become the de facto standard method for mobile payments in Japan. Its core technology, Mobile FeliCa IC, is partially owned by Sony, NTT DoCoMo and JR East.
Mobile FeliCa utilize Sony’s FeliCa technology, which itself is the de facto standard for contactless smart cards in the country. NFC was used in transports for the first time in the world by China Unicom and Yucheng Transportation Card in the tramways and bus of Chongqing on 19 January 2009, in those of Nice on 21 May 2010, then in Seoul after its introduction in Korea by the discount retailer Homeplus in March 2010 and it was tested then adopted or added to the existing systems in Tokyo from May 2010 to end of 2012.
After an experimentation in the metro of Rennes in 2007, the NFC standard was implemented for the first time in a metro network, by China Unicom in Beijing on 31 December 2010. Other NFC vendors mostly in Europe use contactless payment over mobile phones to pay for on- and off-street parking in specially demarcated areas. Parking wardens may enforce the parking by license plate, transponder tags, or barcode stickers.
In Europe, the first experimentations of mobile payment took place in Germany during 6 months, from May 2005, with a deferred payment at the end of each month on the tramways and bus of Hanau with the Nokia 3220 using the NFC standard of Philips and Sony.
In France the immediate contactless payment was experimented during 6 months, from October 2005, in some Cofinoga shops (Galeries Lafayette, Monoprix) and Vinci parkings of Caen with a Samsung NFC smartphone provided by Orange in collaboration with Philips Semiconductors (for the first time, thanks to “Fly Tag”, the system allowed to receive as well audiovisual informations, like bus timetables or cinema trailers from the concerned services).
From 19 November 2007 to 2009, this experimentation was extended in Caen to more services and three additional mobile phone operators (Bouygues Telecom, SFR and NRJ Mobile) and in Strasbourg and on 5 November 2007, Orange and the transport societies SNCF and Keolis associated themselves for a 2 months experimentation on smartphones in the metro, bus and TER trains in Rennes.
After a test conducted from October 2005 to November 2006 with 27 users, on 21 May 2010, the transport authority of Nice Régie Lignes d’Azur was the first public transport provider in Europe to add definitely to its own offer a contactless payment on its tramways and bus network either with a NFC bank card or smartphone application notably on Samsung Player One (with the same mobile phone operators than in Caen and Strasbourg), as well as the validation aboard with them of the transport titles and the loading of these titles onto the smartphone, in addition to the season tickets contactless card.
This service was as well experimented then respectively implemented for NFC smartphones on 18 and 25 June 2013 in the tramways and bus of Caen and Strasbourg In Paris transport network, after a 4 months testing from November 2006 with Bouygues Telecom and 43 persons[38] and finally with 8,000 users from July 2018, the contactless mobile payment and direct validation on the turnstile readers with a smartphone was adopted on 25 September 2019 in collaboration with the societies Orange, Samsung, Wizway Solutions, Worldline and Conduent.
Other vendors use a combination of both NFC and a barcode on the mobile device for mobile payment, because many mobile devices in the market do not yet support NFC. QR code is a square two-dimensional bar code. QR codes have been in use since 1994. Originally used to track products in warehouses, QR codes were designed to replace the older one-dimensional bar codes.
The older bar codes just represent numbers, which can be looked up in a database and translated into something meaningful. QR, or “quick response”, bar codes were designed to contain the meaningful information directly in the bar code. QR codes can be of two main categories:
- The QR code is presented on the mobile device of the person paying and scanned by a POS or another mobile device of the payee
- The QR code is presented by the payee, in a static or one time generated fashion and it is scanned by the person executing the payment
Mobile self-checkout allows for one to scan a QR code or barcode of a product inside a brick-and-mortar establishment in order to purchase the product on the spot. This theoretically eliminates or reduces the incidence of long checkout lines, even at self-checkout kiosks.
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