Mobile Payments And Ecommerce Made For Each Other
E-commerce and Mobile payments are not new technology trends. While the former has been around since the early 90s, m-commerce or mobile commerce took off with the advent of smartphones, PDAs and other internet-enabled handheld devices. Mobile payment, an essential component of m-commerce, has been in use for more than a decade. From the first instance of mobile phones being used to dispense soft drink cans from a Coca Cola vending machine through an sms in Finland in 1997, by the turn of the century it rapidly progressed to include payment of parking fees, train and air ticketing, among other things. However, it was the launch of the iPhone and the subsequent widespread use of smart phone apps that really fuelled the growth of mobile payments for purchasing good and services.
The advantage of mobile payments is that it presents mobile users an instant source of currency for making purchases using their phones or handheld devices. For years now, there have been different types of payment mechanisms that have tried to provide this service. The earliest version used sms for getting a payment authorised, which was then included in the customers mobile bill as a premium charge. However, this was dogged with problems such as unreliability due to messages getting lost, slow speed, security issues and high costs. Since then, more advance payment systems have been put into practise, including direct mobile billing, WAP based payments and NFC payments.
According to Gartner forecasts in 2011, there would be over 190 million mobile payment users worldwide by the end of 2012 (more than double the number in 2009). A report by market analysis firm Generator Research, estimates that the market for mobile payments will reach $633.4 billion by 2014, indicating that it will see a rapid growth in the coming years.
Essentially mobile payments will succeed for two reasons. Firstly, it will provide customers a contactless and easy method of payment that is an extension of online e-commerce transactions. As for merchants, the prospect of reaching out to the large number of mobile users is resulting in investments being made in setting up the necessary infrastructure and encryption technology to ensure that the customers financial information is kept secure during the payment process as well as in cases of loss of the smart phone. A number of companies have introduced online payment mechanisms to facilitate easy payment options for customers and merchants. This includes the recently launched Paypal Here and others such as Square, which will help small businesses accept credit cards using iOS and android devices. For customers, PayPal, Google Wallet and Amazon Payments have apps that enable payments to be made without carrying a wallet.
While it will be a while before mobile payments become the accepted mode of transaction for e-commerce, there is no doubt that it will replace the wallet once customers are convinced of the safety of their financial information. More importantly, in developing countries in Asia, the Middle East, Africa and South America, mobile payments will bring financial power to a larger population that does not at present have access to online commerce. Whereas in the west, the paperless transaction that it presents is a push towards the trend of going green.