What Are Mobile Payments and How Do They Work?

What Are Mobile Payments and How Do They Work?


Convenience is key when it comes to mobile transactions. So if you want people to choose your business over others – make sure that they can pay directly through their phone.

Mobile payments are a new way to pay for items using your smartphone. They allow you to purchase goods and services from physical stores, online retailers, or even other people in your area without needing cash or credit cards. Thus, mobile payment systems are getting more popular day by day. These mobile payment systems are changing how people interact with their bank accounts and make transactions. Mobile payments are often called “contactless” or “tap-and-go” because of the process of making them. This includes setting up an account, loading funds to your account and then tapping your device on a payment terminal at checkout in order to complete the transaction. Most mobile payment systems use Near Field Communication (NFC) technology, which allows you to tap your phone on the point of sale system at checkout for it to be processed electronically.

As mobile devices continue to proliferate, mobile payments will become more and more integral to our everyday lives. It is only natural that these advancements come with their own set of security concerns as well. But what exactly is mobile payment? How does it work? And what are mobile payment systems?

In this blog post, we’ll take a look at how mobile payments work and what you need to know about them before you start using them.

How do Mobile Payments Work?

Mobile payments can be made using a wide range of different mobile platforms and technology options that work with major credit card companies like MasterCard and Visa. There is no one standard mobile payment system; instead, there’s plenty of room for competition among various providers. Money transfers between two people are also known as “peer-to-peer” (PTP) transfers. Mobile PTPs usually take place through text messages or email, but some apps use social media networks to facilitate this type of transaction.

Mobile payments work by tapping or holding your mobile device close to the point-of-sale (POS) system in order for it to be processed electronically. Most mobile payment systems use Near Field Communication (NFC) technology, which allows you to tap your phone on the POS terminal at checkout and then pay via a linked credit card account. This is often referred to as “tap-and-go” because of how easy it is when using NFC – all you have to do is tap!

What Are Mobile Payments and How Do They Work

In simple terms, your mobile scans a QR code created by the vendor, but this process is actually a bit more complicated in reality. After you have linked your bank account to the mobile payment app, you use it at the checkout by tapping or holding your phone against an NFC-enabled POS system. As soon as the transfer has been made and confirmed, a receipt will be sent directly to your device.

Not all mobile payments are created equal though – especially when it comes to security concerns related to fraud prevention. For example, some providers may require that users create passwords for their accounts while others let customers sign up with only an email address and then add password protection later on if they desire after reviewing how secure their login was. The main purpose of adding these extra layers of authentication is so users can protect themselves from unauthorised access and potential data breaches.

Mobile payments are certainly convenient to use in many different scenarios, but it’s important that you understand how they work before using them yourself.

Types of Mobile Payments

There are four different types of mobile payment systems and each of them uses a different method to facilitate the transfer of funds:

  1. Mobile Wallets: Also known as “mobile wallets,” these apps allow you to store membership and loyalty cards, coupons, tickets for events or transportation, receipts, boarding passes for flights and trains, access keys to your office parking garage/apartment building door lock…the list goes on!
  2. Wireless credit card readers: You can turn your smartphone into a wireless point-of-sale system (POS) to accept credit card payments on the go. For example, some stores use POS systems that connect with cash registers so employees can quickly scan items and then send payment information directly through an app on their smartphone or tablet without having to press keys on the register itself – it’s quick, efficient, and easy.
  3. In-App Mobile Payments: By making a purchase through an app, you can use your debit or credit card to authorise direct payments within the apps that you download and install. You simply enter any required information (like card details and billing address) and then go ahead with the payment via stored account information.
  4. Mobile browser-based payments: Transactions take place within the mobile browser of a person’s smartphone or tablet. A customer is browsing through different items and then selects one to purchase with their credit card, which is stored in an account accessible via mobile device browsers.

What Is a Mobile Wallet?

A mobile wallet allows you to pay for items in stores by tapping your phone on an NFC (near field communication) terminal. You can add any credit or debit card into the app, allowing easy access when at checkout. This process makes it easier than ever before because there’s no need to remember long numbers and complicated passwords.

Mobile wallets typically come with features like:

  • Ability to store membership cards so you don’t have to carry around bulky plastic versions anymore – just show the cashier your digital version instead.
  • Store coupons/vouchers inside so that they’re ready whenever needed.
  • Access to a GPS system that tracks where you are and what stores/restaurants are nearby. This way, it’s easy to find the best deals in your area.

These mobile wallets have been designed with convenience in mind above all else – which is why they’re so popular among users. They offer flexibility by allowing consumers to add loyalty cards, coupons, event tickets…you name it! All of these things can be stored right inside the wallet for quick access when at checkouts or restaurants.

What Are Mobile Payments and How Do They Work

Benefits of Mobile Payments

  • Track your spending habits and control your budget more accurately.
  • Reduce the time you spend at checkout because all payment information is stored in one place (which means no need to fumble with cash or swipe cards).
  • Save money by storing coupons/vouchers inside for fast access whenever needed.
  • No need to carry a bulky wallet – all of your credit/debit cards and membership cards can be stored on the phone itself.
  • It’s easy for small businesses to use mobile payment systems as there are no additional hardware costs involved (such as point of sale systems).

How to Accept Mobile Payments?

Accepting mobile payments is easy! All you need to do is download a free app from your preferred platform (iOS or Android) and then add in all of the credit/debit cards that you’d like to accept. Your customers will be able to pay for their items on the go by tapping their phone against an NFC terminal – it’s a fast, secure, and simple way for both parties involved.


There is certainly no shortage of reasons why more people around the world choose mobile payments over traditional methods of transactions. In fact, it seems that this method has been so popular among users due largely in part to its convenience…and we cannot help but agree with them!

Shivam B.

Native Writer

It has been 10 years that I am working in the Content Development and Blogger Outreach industry. I can assure timely delivery of top-notch content pieces.