Mobile payment is the purchase of a
product/service using a Mobile phone or Money transfer from a mobile device to
another mobile device. In Mobile payments the goods or services purchased may be
physical, or virtual. Mobile payments use mobile phone as a payment method
rather than an alternative channel to send payment instructions. A Mobile
payment can be made in person, example: at the checkout counter in a retail
store, or remotely, using mobile internet or cellular network infrastructure.
Mobile payments do not include mobile financial services, such as mobile
banking. Mobile payments is different from Mobile banking in which
payments has been made by Mobile web browser or Mobile banking App, and is
simply an extension of online functionality from
the personal computer to a mobile phone. The global mobile payment market is
growing at a CAGR of 35%.
Mobile payments are classified into proximity payments and
remote payments
Proximity payments
Payments made at close distance with
contactless Near Field Communication (NFC), by holding NFC based mobile phone
near payment terminal.
Mobile Wallet
A mobile wallet is a form of mobile payment that allows its users to store debit
cards, credit cards, loyalty cards, and gift cards among other things, as well
as redeeming promotions or coupons on their mobile phone. Some wallets like Google
Wallet and Apple Pay use Near Field Communication technology to transmit
funds. Other mobile wallets use cloud-based apps that need to be first
downloaded from an applications store like Apple iTunes. TIO’s
Mobile Pay app is one such cloud based wallet. Once downloaded, the app
can be opened with a secure PIN or pass-code to pay a store or service providers
from the previously set-up bank account or credit card.
Mobile Point of Sale
(mPOS)
In this payment type the merchant uses their mobile phone along with a credit or
debit card reader. mPOS are simple to use and the reader comes free with
registration, they are good for small denomination transactions but not
for larger ones because of the fees and slower processing times. Square Register
is a good example of anmPOS
Closed Loop Payments
This type of mobile payment is similar to a gift card or loyalty program
customers can opt into. Closed loop mobile payments allow users to download
brand specific apps like the Starbucks
app in which then the app is
treated like a loyalty card. Customers can then manage their balances, load
funds onto their cards, or redeem coupons directly from their mobile phones.
Once a user wants to purchase a coffee in store for example, they will be
presented with a unique barcode. It is then scanned and the amount is taken from
the associated user’s account. One of the big success stories in closed loop
payments has been Starbucks.
Remote payments
Transfer of funds from mobile from a remote location without
physical contact with a reader would classify as a remote payment
Mobile Money Transfer (P2P)
Mobile Payment transfers of Peer
to Peer Transfers (P2P) are used for domestic money transfers, Utility bill
payments and international remittance. P2P form the largest section of the
market forming nearly 65% of the mobile payment market. It will continue to grow
strongly though its share of market will decrease as other areas of the mobile
payment market grow stronger. The P2P mobile payments is expected to be 1375.5
billion USD by the year 2020. Some of the examples in remote payments are
Paypal, Vodafone M-Pesa, Airtel Money and TigoPesa.
Carrier Billing
In which amount of purchase made
online is added into Mobile Bill of customer. Carrier billing companies include
Boku, MoPay and Zong.
In App Billing
Use for purchasing of online
Applications like photos, game levels and for premium services and features for
Mobile or Tablets. Transactions are processed through the App stores and App
stores works as an intermediary between App developer and App user. In app
billing includes players like Google Play, Blackberry World.
South Korea mobile payment market
South Korea has over 30
million smartphone subscribers. Because of it the environment of Mobile payments
has changed in recent years. South Korea is one of the leaders in mobile payment
market in the world. They have attempted new challenges for the decade. The Hana
SK Card, which is leading the mobile credit card segment, recorded a 661.7%
compound annual growth rate (CAGR) in payments from 2010 to 2012.With respect to
the payment and settlement system, South Korea has broad range of laws and
regulations governing transactions and the settlement details thereof, issuance
and distribution of payment instruments, oversight of payment and settlement
systems, and protection for clearing and settlement agreements, etc.
The Bank of Korea Act (BOK Act), the Financial Investment Services and Capital
Markets
Act (FSCM Act) and the Electronic Financial Transactions Act (EFT Act), among
others, clearly stipulate that the Bank of Korea (BOK) plays a principal role in
overseeing payment and settlement in South Korea.
Banks, non-bank credit institutions and credit card companies can issue
electronic money in South Korea without the approval of the Financial Service
Commission, while other institutions need approval to do so. Three types of
electronic money are currently issued in South Korea, all used mainly for public
transport. Meanwhile, other electronic prepayment methods, similar to electronic
money but with convertibility into cash and a range of usage far below those of
electronic money, are classified as “electronic prepayment instruments” in Korea
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