Mobile payment technology impact on business

mobile payments

With the range of services available for making payments using your smart phone, it is sometimes difficult to differentiate between terms like mobile money, mobile banking, mobile payments etc.

We will start by explaining the distinct differences between some these concepts with respect to payments as provided by the World Bank.

Mobile Banking: This implies the use of a smart phone app provided by your bank that allows you to carry out transactions through that specific bank. In order to use a particular mobile banking app, you should be a customer of that bank. Payment transactions are usually made from your account to other payee accounts.

Mobile Money: This refers to third party services installed on smart phones which allow all registered customers to send and receive payments among themselves. The payments could be domestic or international. Both sender and receiver need to use the same app in this case. These payments are person to person payments.

Mobile Payment: Mobile Payments are Person to Business Payments that can be made over the mobile phone. This includes mobile proximity payments where a mobile phone is used to make purchases at the POS terminal through contactless technology like Near Field Communication (NFC) or mobile remote payments where it is used to purchases products or services online using mobile phones.

Mobile Wallet: Wallet apps usually help you to store your credit/debit card information and then allow your device to make purchases on your behalf. The apple pay integration and Samsung Pay are examples of mobile wallets. Thus mobile wallets can be considered as a subset of mobile payments.

Mobile payments have become popular because they offer consumers a convenient mode of payment over credit cards, contactless card readers, cash and checks. From a business owner perspective they are easier to adopt and do not need a large investment in infrastructure. Business owners also get an opportunity to engage with the customers throughout their journey.

These benefits have led to the increased adoption of mobile payment services by businesses and consumers. According to a McKinsey report, “In the US, in person use of digital wallets will increase at a 45 percent CAGR to reach $400 billion in annual flows by 2022”. Given these benefits, we will now try to understand use cases for mobile payments in a few niche industries and their advantages over traditional banking methods.

We will also look at the implementation challenges that businesses who want to adopt this technology need to overcome.

Mobile Payments Applications in Industry

While much has been written about the use of mobile payments and mobile wallets at POS terminals in retail and for online purchases, we will look at a few other applications of mobile payments.


Cash has been the traditional mode of payment for farmers in developing economies. This has resulted in difficulties for both farmers and their buyers.  Carrying cash is a security risk for farmers as banks are not easily accessible in rural areas.

For buyers it is fraud-prone due to the record keeping required for cash payments corresponding to goods received from multiple farmers. As such the security and record-keeping costs are high.

Countries in Africa and South Asia are facilitating mobile payments for farmers. Farmers prefer mobile payments as it gives them a chance to accumulate their savings and ensure safety for their money. Following infographic from world bank illustrates the penetration of mobile payments in agriculture in Africa.


Using mobile payments for transportation/ticketing by replacing use of plastic tickets can help in increasing customer convenience and at the same time reduce operating costs, increase speed and reduce physical waste.

Instead of tapping their ticket, commuters can tap their mobile phones for fare payment on trains and buses. This is certainly convenient as most people carry their mobiles in their hands whereas card needs to be taken out from a wallet or bag.

The mobile app is already linked to the preferred payment card and communicates with the card and processes the payment. This can also do away with the hassle of topping up fare cards.

Advantages over traditional banking methods

Irrespective of the sector, adopting a mobile payment strategy can help businesses and organizations in many ways as follows

  1. Improve customer experience: Whether its purchasing goods and services at a store POS, paying for the fare or paying farmers and other small business owners, consumers enjoy the flexibility offered by mobile payments and it helps the business to improve the overall customer experience
  2. Ease in bookkeeping: Mobile payments offer small businesses an easy and cost-effective solution for cash flow management and tracking transactions without the overhead costs of bank charges and bookkeeping costs.
  3. Integration with other programs: Mobile Payment solutions can be easily integrated with loyalty programs to keep track of purchases, reward points, coupons, etc. They can also provide insights into customer behaviour which can aid in targeted marketing campaigns.
  4. Faster Transactions and Cash Flow: Mobile payments using NFC technology are completed in seconds, which is faster than processing credit cards or transacting with cash. You can send remote payments anytime, anywhere using mobile. Thus business are able to collect payments immediately after the delivery of product or service. Logically this also implies that your customer base can be located anywhere in the world.

Implementation Challenges

While the existing infrastructure can be easily enhanced to support mobile payment options there are other security and customer behaviour related challenges that need to be overcome to fully adopt the technology.

Security: Both customers and business owners are concerned about the security of mobile payment solutions. With all their financial information on a single device, being transferred electronically, users are concerned about possible security breaches due to loss of mobile or if someone intercepts the data. Introduction of fingerprint verification before payment has helped to secure the process but it may take time to increase the confidence in technology especially in the older generation.

Multiple Options: There are multiple players in the mobile payment market depending on the smart phone device and operating system being used. This can be confusing for consumers. Karen Webster from has talked about the importance of creating certainty for consumers when using mobile payments. Creating a consistent payment experience is key to ensuring this certainty.

Technology: In developing countries where mobile payments can be most beneficial there are technological restrictions due to slow networks, weak infrastructure, and high cost of new generation smart phones. These obstacles need to be overcome before seamless mobile payments can be supported in these countries.


In spite of the implementation challenges, small businesses across the world and in all sectors of the industry can definitely benefit from the different forms of mobile payments. Mobile Payments come in a variety of forms (proximity, remote, mobile wallet, SMS based etc.) and it is important to identify what works for your business.