Mobile payments are expanding rapidly online and in stores—according to the Banque de France’s Observatory for the Security of Payment Means, their use increased by more than 137% between 2021 and 2022. Supporting mobile payment options enables businesses to cater to customer preferences and improve the overall purchasing experience. In this article, we’ll examine what mobile payments are, how they work, the various forms they take, their advantages and disadvantages for businesses, and more.

What’s in this article?

• What are mobile payments?
  
• What types of businesses support mobile payments?
  
• How do mobile payments work?
  
• The main types of mobile payments
  
• The pros and cons of mobile payments for businesses
  
• How Stripe can support mobile payments for your business
  

What are mobile payments?

Mobile payments, also known as m-payments, are a modern and flexible method that allows customers to make purchases or complete transactions using a smartphone or smartwatch. This secure and reliable approach simplifies the checkout process for both buyers and merchants.

Several types of mobile payments are used in France, including digital wallets, quick response (QR) codes, banking applications, and closed-loop systems, which involve using the merchant’s app or card.

What types of businesses support mobile payments?

Most businesses in France already support mobile payments:

Brick-and-mortar stores
An increasing number of retailers accept mobile payments through their integrated point-of-sale (POS) systems. This gives shoppers an alternative to traditional payment methods, thereby facilitating the payment experience for both parties.

Ecommerce sites
Online stores often offer this payment method to customers making purchases on their mobile devices.

Vending machines and kiosks
Many vending machines and kiosks are now equipped with mobile payment capabilities, enabling customers to pay using their smartphones.

Self-employed workers and small businesses
Mobile payment solutions make it easy for small businesses to accept money, typically through peer-to-peer (P2P) applications.

Subscription-based service providers
Mobile pay is particularly convenient for recurring charges, as it lets customers manage their subscriptions directly from a mobile app.

Mobile payments aren’t restricted to commercial activities. Restaurants, cinemas, and theme parks can also integrate them into their systems to facilitate purchases. The same goes for nonprofits and transportation services, among others.

How do mobile payments work?

Mobile payments primarily rely on two technologies: near-field communication (NFC) and QR codes.

NFC technology

The chip in most bank cards is NFC-enabled. This technology supports contactless data transfer between compatible devices. Digital wallets, such as Apple Pay, Samsung Pay, and Google Pay, rely on NFC for mobile payments.

At the register, the shopper selects the card they wish to use, holds their mobile device to the POS terminal, and confirms the transaction with a fingerprint, facial recognition, or a verification code. To purchase online, the customer chooses the digital wallet card and confirms the transaction directly from their mobile device.

QR codes

QR codes are typically merchant-generated. The user scans the code and processes the transaction. This mobile payment method is especially convenient—it works both in stores and online, making remote sales easier.

The main types of mobile payments

Here are the main types of payments that can be made using a smartphone or smartwatch:

Digital wallet payments
Digital wallet payments are becoming increasingly popular with customers—according to Crédit Agricole, 40% of online shoppers in France regularly use this mobile payment method. To pay using a digital wallet, users simply add their banking card to the mobile payment app. The digital wallet stores card details and enables them to make web and in-store purchases.

Banking app payments
Account holders can use their bank’s mobile application to make payments.

P2P payments
P2P apps such as Wero allow users to transfer money between accounts in under 10 seconds. It’s ideal for transferring money between individuals. Entering the recipient’s phone number is all that’s required to process the transaction.

Closed-loop payments
Businesses often develop their own mobile applications to foster loyalty. These apps let users make payments, claim rewards, and enjoy discounts.

Text-to-pay or email payments
Merchants can send customers a payment link by text message or email, allowing them to settle from their smartphone.

The pros and cons of mobile payments for businesses

Mobile payments are easy, fast, and secure. They offer businesses many advantages:

• Enhanced shopper experience: They speed up checkout, cut down wait times, and promote customer satisfaction and loyalty.

• Expanded customer reach: Businesses that support mobile payments can target a broader audience, including those who prefer digital payment methods over traditional card or cash transactions.

• Lower transaction costs: Mobile payments are free of charge for users. Some traditional card payments could be subject to fees.

• Superior security: Mobile payment platforms comply with stringent security standards. They often rely on advanced features, such as tokenization and biometric authentication, to reduce the risk of fraud and data theft.

• Boosted sales: The convenience and speed help increase sales and conversion rates.

• Loyalty program integration: Loyalty programs can be integrated to encourage repeat buying.

• Contactless payments: Contactless mobile payments are more hygienic than cash or physical cards.

• International transactions: Mobile payment solutions simplify currency conversions, which is valuable for businesses with a global client base.

However, there are drawbacks, specifically in terms of technology:

• The digital divide: Individuals without a smartphone can’t use mobile payments, thereby widening the digital divide and excluding certain clients.

• Equipment: Mobile payment only works if the user’s device is turned on and connected to the internet. Some retailers still lack contactless terminals.

• Upfront costs: Setting up mobile payments might require investing in infrastructure.

• Adoption: Customers accustomed to traditional payment methods might be hesitant to adopt mobile payments. That’s why it’s important to promote awareness of their benefits, especially in terms of security.

• Security: Despite their advanced security features, mobile payments are not risk-free. Using a comprehensive fraud detection and prevention system is key.

• Technical issues: The system can experience outages or failures.

How Stripe can support mobile payments for your business

Stripe Payments enhances mobile payments for businesses with online and in-person operations:

Mobile integration
Our software development kits (SDKs) for Android and iOS make it straightforward for businesses to integrate Stripe into their mobile apps. Stripe ensures a secure mobile payment experience that is compatible with popular digital wallets such as Apple Pay and Google Pay.

International payments
Stripe’s global network allows businesses to process transactions through a local acquirer. This reduces costs, boosts authorization rates, and expands customer reach worldwide.

Fraud detection and prevention
Stripe Radar automatically detects and blocks fraudulent activities. Businesses can also customize their security settings with Stripe.

Automation
Stripe’s application programming interfaces (APIs) and webhooks automate a wide range of payment processing tasks, enhancing efficiency and enabling businesses to grow their revenue.