Everything you need to know about the touchless payment method
Holding a phone near a card reader to pay may seem like something out of a futuristic sci-fi movie; however, mobile pay is becoming more common. Even before the COVID-19 pandemic, it was rising in popularity. Juniper Research forecasted that by 2024 in the U.S. alone, $1.5 trillion in transactions would be completed via mobile payment.
The global pandemic has caused the popularity of mobile pay to skyrocket, since it allows consumers to bypass traditional in-person payment methods, such as cash, checks, and credit and debit cards, to conduct a contactless payment. An April 2020 study from Mastercard found that 46% of global consumers have already swapped cards for ones that provide contactless functionality. If you’re thinking about joining them, here’s everything you need to get started with mobile pay.
What is mobile pay?
Big picture: Mobile payments are transactions that take place digitally through handheld devices instead of physical exchanges, such as cash, checks, and credit cards. They include peer-to-peer transfers through apps such as Venmo and PayPal. These apps are commonly used when friends want to chip in for group dinners, to leave tips for service professionals, or to purchase items off user sites such as Craigslist. At a brick-and-mortar business, mobile pay involves using an app to transfer funds via a point-of-sale device.
How does mobile pay work?
To use mobile pay at brick-and-mortar stores, consumers set up mobile wallets. These apps store your debit and credit card information so you can pay digitally. To set this up, download your wallet app of choice, such as Apple Pay, Samsung Pay, or Google Pay, and enter your card data. In some cases, you can just upload a photo of the card. This information is stored securely until it’s used.
When you’re ready to pay, simply hold your phone near the point-of-sale device to complete your purchase. Mobile wallet payments work off a technology called Near Field Communication (NFC), which allows devices to communicate wirelessly when close to each other. In the case of mobile wallets, the reader and your phone typically need to be within two inches of each other. NFC is a subcategory of Radio-Frequency Identification (RFID), which has been used for decades. It helps us to scan and identify things — like your grocery items — via radio waves. This type of mobile pay is sometimes also called tap to pay.
The benefits of mobile pay
Our smartphones are becoming ubiquitous in everyday life. Because we nearly always have them with us, mobile pay is a convenient way to pay for most shoppers. Additionally, the scan processes in a moment, so it’s a fast way to complete your transactions. Contactless payments are also more valuable than ever amid the ongoing public health crisis.
Are mobile payments secure?
Mobile pay is a secure way to conduct transactions. First, to access them, most mobile wallet apps require thumbprint authorization, facial recognition authorization, or inputting a code. Additionally, the transactions themselves utilize something called tokenization, which makes for secure exchanges. As an example, here’s how this works with Apple Pay: When you load your credit card details into your mobile wallet, the app pings your bank with the information. Your bank sends back a token — a series of randomly generated numbers. The app then replaces your 16-digit card number with this token. That means your account details aren’t kept on your phone or exchanged when you’re conducting a transaction. The token is used instead. In a way, this makes mobile pay even more secure than swiping your card at a payment terminal because your actual financial information isn’t transferred. This makes you less susceptible to data breaches and fraudsters.
To ensure you’re conducting payments safely, make sure you’re not walking around with an unlocked phone. With an unlocked phone, a thief could easily access your personal information. Utilize the device locking features on your smartphone so it can only be accessed via security measures. Turn on device tracking so the phone can be located and wiped of personal data in the event it’s lost or stolen. This is a good idea for all smartphone users, even if you choose not to use mobile pay features.
Always install the latest updates of operating software on your mobile device and the current edition of your third-party wallet app. These updates often include security patches that safeguard against the latest hacking attempts. Only download trustworthy third part apps with strong user reviews. This applies to all apps, not just your mobile wallet. If you download an unreliable app, you may inadvertently install malware that could infect your mobile wallet and steal sensitive information. You’ll also want to review all apps’ security and privacy policies, so you understand how your data is being used, stored, and, in some cases, shared with advertisers.
Overall, mobile pay is a fast, easy, and secure payment method that will likely increase in popularity over time.