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How Do Mobile Payments Work?

How Do Mobile Payments Work? post image mobile credit card payments

 

A few weeks ago my hair stylist swiped the credit card on her iPhone and then handed it to me to add a discretionary tip and sign the charge with fingertip.  I entered my email address for a receipt and it was in my inbox before I made the short drive home.

That experience and the announcement of Google Wallet made me curious about these mobile forms of payment.

Square

Square is a simple way for anyone with an android phone or iPhone to process credit card payments.  A card reader is attached to the phone via the audio jack.  The free reader is provided by Square or you can buy it at Apple stores and get a rebate.

This is great for small businesses, such as my hair stylist, and eliminates the need for complicated payment systems that require paper receipts and overhead.  I even thought about it as a way to get payments quickly from my adult child who seems to never have cash on him.

PayPass

PayPass is a MasterCard offering enabling users to pay for products with a simple tap of the credit card, key fob or mobile phone.  The “tap” can be read when the card or device is within 1-2 inches of the reader.

The technology that supports this functionality is a hidden embedded computer chip and radio frequency antennae according to PayPass.  This sends the information wirelessly to the credit network.

This is a good payment method when speed of transaction is important.  You can pay quickly at locations that tend to have lines such as gas stations, stadiums and fast food restaurants.

Google Wallet

Google wallet goes beyond processing payments.  The goal is to become a virtual wallet that stores more than your plastic credit card information.  It would become your wallet by storing coupons, gift card and loyalty card details.

This app is set to launch soon and will initially be supported only on the Nexus S 4G phone and limited to Citibank PayPass enabled cards and a Google prepaid card.

Instead of holding your card near the reader, the phone would be placed within a few inches of the payment terminal.

The reason you might want to use this system is to eliminate even carrying a credit card with you.

Security and Privacy

The main benefit to consumers with these mobile payments is that your credit card never leaves your sight.  No one is taking it to a back room and copying the numbers.  Square does not collect or share buyer information.

It’s important to immediately notify the credit card company when you lose a PayPass or Google Wallet card or device.  I recommend reviewing the security and privacy sections of each product before using to ensure you feel adequately protected.

 

I think automating the payment process, without compromising protection, is good for all consumers.  What’s your experience with these mobile payment methods?

Photo: Some rights reserved by @cdharrison

by Kay Lynn

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Comments on this entry are closed.

  • http://www.krantcents.com krantcents

    I have no experience with it, however it seems it may be easier to hack. The information is being transferred over the cell network. I would like to learn more about the security end.

    • http://www.bucksomeboomer.com/ Kay Lynn

      All of these sites have information regarding security. I never even thought about that when using it to pay for my haircut. My stylist does offer the option of personal checks or cash.

  • http://www.fsyaonline.com Financial Success for Young Adults

    Although I haven’t directly used any, I saw the iPad payment system in action at a very hip yogurt place in Atlanta. It’s interesting to see how these will all be recieved. Most people are concerned with the safety of it all. I did a quick overview on Google Wallet as well if you want to check it out.