by Claudia Bruemmer

The world has 5.3 billion mobile subscribers, which is 77 percent of the world population. The U.S., in fact, has 87 percent wireless penetration, and the use of mobile phones is rapidly becoming the norm. Couple these statistics with the technology that allows merchants to process a credit card by phone when receiving customer payments and you have the beginning of a paradigm shift in the way retail merchants accept payments for goods. Below is a review of how retailers, wholesalers and general merchandise vendors can take advantage of the mobile payments opportunity.

Consumers can now enable credit card payments quickly and easily by mobile payment. People can swipe their credit cards with their iPhone, Blackberry, or Android cellphones and pay for products and services on the go. Authentication is fast, receipts are sent by email, and the system is fast and easy.

Google’s support to NFC (Near Field Communications) by integrating NFC in Android phones will foster the use of mobile payments. Mobile payments have the attention of banks, payment gateways, handset manufacturers, entrepreneurs and phone companies, and they should be a boon to merchants as well as consumers.

Opportunities in Mobile Ecommerce
Mobile ecommerce consists of (a) Mobile Banking and (b) Mobile Payments and Money Transfers. Mobile Banking is where you use your mobile phone to access financial services like online banking. Mobile Payments and Money Transfers are where you use your mobile phone as a payment device to transfer payment from one party to another. Mobile banking has already gained traction in developing countries, where banking customers can check their bank balance, transfer funds and receive alerts. Mobile banking provides convenience and accessibility for customers, as well as portability, security and multi functionality.

Mobile Payments and Money Transfers are of more interest to business organizations. This is how mobile phones are being used beyond mobile banking, involving the transfer of money from one party to another. This provides the potential for huge transaction volumes initiated via mobile phones, and this volume can translate into significant revenue opportunities for many stakeholders, including wholesalers and retailers.

Growth in the mobile payments market will be driven by (a) the growth in mobile subscribers, (b) the increasing versatility of mobile devices, (c) the proliferation of contactless acceptance terminals, and (d) the span of geographic locations gaining access to mobile technology. The foundation for large-scale use and increased adoption of mobile payments and money transfers is being set right now in many places around the world.

Mobile payment is becoming a major way of paying in Asia and Europe. Instead of using credit card or cash, users need only use their mobile phone to do a transaction. Additionally, mobile phones are currently delivering safe and stable payments and money transfer systems in countries that have well developed mobile networks yet lack a widespread banking infrastructure.

Types of Mobile Payments
There are different types of mobile payments depending on the reason for making the payment, and these are described below.

Remote Mobile Payments. The purchase of services or physical goods remotely using SMS text, browser-based wireless access protocol (WAP), or proprietary apps on a mobile device. A good example is the remote mobile payment of digital content through mobile operators (like purchasing ring tones or digital content).

Mobile Top Up. A mobile prepaid account using a credit/debit card, or cash at a store location via a scratch card, point of sale, or kiosk. The mobile top up opportunity is significant in markets where the majority of mobile accounts are prepaid like in Europe and Asia.

Person-to-Person Remittances. The transfer of funds between mobile subscribers by mobile device, aka Mobile Money Transfers. Providers like Western Union enable remote consumer-to-consumer payments by accepting cash at a physical location and electronically transferring funds to a recipient for a fee. The ability to send money transfers through mobile phone messages provides convenience as well as safety.

Mobile Bill Payment. The use of a mobile device to initiate the transfer of funds from a person to a business to pay an obligation. In developing countries, mobile bill payment represents a very convenient and significant change. In these countries people must physically travel to make certain types of payments, like getting on a bus with cash to pay a utility bill. In these markets, the mobile channel is forming a banking infrastructure.

Physical Mobile Payments. The purchase of goods or services using a mobile device at the point of sale through contactless technology, which are also known as proximity payments. Consensus is being created around standards for Near Field Communications (NFC) since Google’s support of NFC in Android.

The Future of Retail and Ecommerce
Since almost everyone has a smartphone, and retailers can bring costs down with mobile payments, providers of transaction services are getting ready to market their offerings. Some providers plan to give away free swipers to be used with an app on a phone. Actually, there are two ways to handle transactions. One way is to use an application where consumers can type in their credit card information. The other is to add a swiper that plugs into the smartphone and they can swipe the card. In fact, there are even apps that allow a retailer to use an iPad as a cash register. Retailers that operate entirely online also benefit from this new technology, even if they never physically handle plastic.

In closing, it’s coming to the point where customers will be able to use cellphones to send and receive money quickly and easily, as long as they have funds in the bank, without worrying about cash, checks or other higher-cost services. This is good news for wholesalers and retailers alike.