Increasingly, businesses are recognising the importance of delivering quick and seamless mobile payment capabilities to cater to consumers who demand the ability to transact when, where and how they choose.
So says Kunaciilan Nallappa, solution marketing director for Asia-Pacific at F5 Networks, who notes that for the end-user, having the ability to conduct payments on a mobile device is extremely convenient.
For businesses and financial institutions, Nallappa adds, the convenience and security of mobile payments can bring new revenue sources via e-commerce, and enhance customer loyalty through programmes designed to leverage consumers' mobile data.
Market analyst firm IDC says the worldwide smartphone market grew 25.3% year-on-year in the second quarter of 2014, establishing a new single quarter record of 301.3 million shipments. This is the first time quarterly smartphone shipments have surpassed the 300 million unit mark, representing a major milestone for the industry, says IDC.
MasterCard, in its latest Mobile Payments Readiness Index, says while it's early days for the adoption of mobile payments globally, some markets are making progress towards attaining the right mix of market forces and consumer acceptance.
According to Nallappa, there are two primary types of mobile payments - those made at the physical point of sale, and those in the e-commerce environment, defined as proximity payments and remote payments respectively.
He explains remote payment is when a mobile device is used to access the payment back-end system via mobile communication networks and complete the payment. Proximity payment is a contactless payment, where a mobile device is used to realise information exchange and complete payment by way of short-range communications technologies, he adds.
Nallappa says the hospitality industry has been quick to embrace mobile payment technology as operators seek industry-tailored mobile solutions to improve efficiency, boost profitability and increase guest satisfaction.
Retailers in the US are also jumping on the bandwagon, he notes, saying Walmart, Target and others have teamed up as the Merchant Customer Exchange to develop a mobile application enabling customers to pay for goods at participating stores' registers with their smartphones.
"A personal experience that struck me as game-changing was in the public transportation sector. While in a taxi in the US, I was able to make my payment using the taxi driver's iPad, which came equipped with payment software and an attachment through which to swipe cards. Upon approval, an e-mail receipt was sent to me."
However, Nallappa says although the future of mobile payments offers unrivalled opportunity for businesses, ensuring its security is vital to maintain consumers' trust.
"It is important to rethink security and enhance infrastructure, along with taking into account the needs of demanding smartphone users who want to securely work and play on their device of choice. The most important thing to remember is: protecting your business is your top priority. Mobile payment services are a great way to deliver a quick and seamless service, but can also cause problems if not managed correctly."
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