Mobile payment processing guide

What are mobile payments?

Mobile payments are when customers use a mobile device (like a smartphone, tablet, or smartwatch) to send money to businesses or each other.

That could be using a smartwatch to buy groceries at a bricks-and-mortar store, reimbursing a family member through an app like Venmo, or using a smartphone to pay a bill online.

Mobile payments rely on technologies like QR codes, near-field communication (NFC), and mobile apps to take place – as well as payment security methods such as biometric verification, encryption, and tokenization for protection.

Types of mobile payments

Mobile payments take many forms: from digital wallets such as Apple Pay and Google Pay to peer-to-peer payment apps like Venmo and PayPal.

Let’s dig into each way to pay via mobile in 2023.

What is an NFC mobile payment?

An NFC mobile payment is a form of contactless in-person transaction facilitated by near-field communication (NFC) technology.

NFC capabilities are built into most modern smartphones, as well as all card readers that enable tap ‘n’ go payments at the point of sale. Each device essentially contains a chip with its own specific RFID (radio-frequency identification) frequency. When two chips are close to each other (for instance, your phone and a countertop card reader), they create a connection, which enables the transfer of information.

NFC and RFID technology are also found in key cards and fobs, security systems, and public transport networks.

How do mobile payments work?

Mobile payments work in a variety of ways, and depend on whether the customer is using their mobile device to pay in-store or online.

In-store mobile payments could involve:

• A contactless digital wallet payment – verified biometrically through the customer’s smartphone, and enabled through NFC technology.
• A QR code scanned at the point of sale. This can work two ways: either you scanning a QR code on the customer’s phone, or the customer scanning a QR code from your countertop POS or payment app.
• A customer using a credit or debit card to make a purchase from your mobile payment terminal (a card reader connected to your smartphone or tablet).

Online mobile payments might look like:

• A customer accessing your website from the browser (such as Safari or Google Chrome) of their mobile device, and completing a purchase from your business there: checking out either by entering their credit card details, or with a digital wallet.
• A customer making a purchase through your business’s ecommerce app installed on their smartphone or tablet.
• SMS payments, in which you send your customer a payment link directing them to a mobile-friendly checkout page.
• Peer-to-peer payments, where an individual sends another money through an app such as Venmo, PayPal, or Zelle.
• Direct carrier billing, in which a customer charges the cost of a purchase made online, via their mobile device, to their phone bill.

As for the specifics of the transaction, mobile payments work in much the same way as any other credit or debit card payment. After first being captured and encrypted by your payment gateway, the transaction information is passed onto your payment processor to be authorized – in a way that tokenizes the data and ensures it’s handled in a secure, compliant environment.

To learn more about how online payments work, explore our simple, jargon-free guide to credit card processing.

Read more: A merchant's guide to in-app payment processing

Why offer mobile payments?

As a merchant, accepting mobile payments isn’t a 'nice-to-have’, or even a ‘should-have’ – it’s a ‘must-have’.

So what can offering mobile payments give back to you – and your customers? Some of the benefits of mobile payments include:

• Convenience: digital wallets, SMS payment links, and mobile-friendly websites are all extremely convenient payment methods for the customer. By offering them, you make the experience of shopping with your business easier – and make it more likely they’ll buy from you again.
• Speed: a customer can initiate a mobile payment in seconds by pushing a button on their smartphone, and the transaction takes mere moments to go through. Better still, they don’t involve a customer sifting through bucketloads of nickels to find the right change as the queue gets longer – just swift, contactless, and hassle-free payments.
• Reach: with 85% of adult Americans owning a smartphone – and global smartphone ownership sitting at around 86%, or close to seven billion people – mobile payments help your business tap, quite literally, into a massive market of customers.
• Security: most mobile payments (whether online or in-person) require some form of biometric verification from the customer. Simply possessing the credit or debit card isn’t enough; they’ll also be required to verify the purchase through their mobile device: either with their unique fingerprint or facial signature, or something only they know, such as their passcode or Apple ID. What’s more, mobile payment transactions are protected by tokenization, while the devices themselves – if lost or stolen – can be remotely wiped to prevent unauthorized access to stored credit cards.
• Integrations: mobile payment apps can integrate with other aspects of your ecommerce setup. They work seamlessly, for example, with customer loyalty programs – allowing customers to earn and redeem rewards or discounts every time they use their mobile device to buy from your business. Some mobile apps have also expanded their services to include budgeting tools, microloans, and other financial insights to help customers better manage their money.

Read more: Wero set to disrupt European payments

How can I implement mobile payments?

To get started, you’ll first need a payment service provider that can equip you with the ability – and the technology – to accept mobile payments.

How exactly you do this will depend on the company you’re working with. At Checkout.com, for instance, integrating Apple Pay into your payments setup is a simple process; you can do it yourself, via our step-by-step guides and video tutorials, or reach out to our team for assistance.

As for accepting mobile payments in-store, you’ll need to ensure your terminals are of the NFC-enabled, contactless-equipped variety. Most models being manufactured today should be – although older models, which rely on swipe or chip and pin payments, will require replacement. Your POS setup should also be compatible with QR code scanning.

Ultimately, your ability to accept mobile payments will only be as good as the payment service provider you choose – so choose wisely. (We’ll explain how below!)

Implement mobile payments with Checkout.com

When you pick Checkout.com to process your mobile payments, you don’t simply get a payment service provider – but a partner. We’ll work with you to develop a customized mobile payments strategy that works for your business’s precise needs – whether those are accepting digital wallet payments online and in-store, or adding SMS payments to your setup.

Our mobile payment solution lets you accept mobile payments from around the world. And through the local apps and brands (be it WeChat Pay in China, Kakao Pay in South Korea, or Apple Pay in the US) your domestic and international customers in over 150 countries, and nearly 50 currencies, are most familiar with.

When you accept mobile payments with Checkout.com, you’ll be able to create unique, customizable payment pages. Benefit from our payment gateway’s lightning-fast processing. And, through our mobile-optimized 3D Secure authentication, make it simple for your users – while making it difficult for fraudsters to target your business.

To find out more about how to implement mobile payments with Checkout.com, get in touch with our sales team for a no-obligation chat about your credit card processing needs.