Wireless payment system
Payments made through mobile and wireless devices.
5-mark Exam Answer
Wireless (mobile) payment systems use smartphones and wireless devices to make payments. According to Laudon and Traver, there are two broad categories: NFC-based point-of-sale payments and social/mobile peer-to-peer (P2P) payments, with services like Apple Pay and Venmo as leading examples.
- 1.Two categories: NFC point-of-sale and social P2P
- 2.NFC uses short-range (~2 inch) wireless
- 3.P2P services funded by bank debit cards, free
- 4.Venmo is the leading P2P app
- 5.Mobile P2P forecast at $174 billion by 2020
The use of mobile devices as payment mechanisms is already well established in Europe and Asia and is now exploding in the United States. There are two broad categories: NFC-based point-of-sale payments (digital wallets like Apple Pay, Android Pay, Samsung Pay) and social/mobile peer-to-peer (P2P) payments.
Near field communication (NFC) is the primary enabling technology for mobile point-of-sale payment systems. NFC is a set of short-range wireless technologies used to share information among devices within about 2 inches of each other. Consumers swipe their NFC-equipped phone near a merchant's reader to pay for purchases.
Social/mobile peer-to-peer (P2P) payments are another rapidly growing category. Services such as Venmo, Square Cash, Snapcash, the refocused Google Wallet, and Facebook Messenger Payment enable users to send another person money through a mobile application or website, funded by a bank debit card. There is no charge for this service.
Venmo, owned by PayPal, is particularly popular, with its success in part due to its integration with Facebook and its social network newsfeed, which lets users see when friends are paying other friends or paying for products and services. Analysts forecast that mobile P2P will grow to $174 billion, worth 30% of total P2P payment volume, by 2020 — up from $5.6 billion, or just 1%, in 2014.
Friends split a dinner bill using Venmo: each taps their phone, enters the amount and recipient, and the money moves from their bank debit card to their friend — no cash, no card fees, and a social newsfeed shows the payments.
Wireless payment systems span NFC point-of-sale wallets (Apple Pay, Android Pay, Samsung Pay) and social P2P apps (Venmo, Square Cash), both growing rapidly as mobile devices become the primary payment instrument.
The exam interface follows the university paper pattern: Section A & B carry 5-mark questions; Section C carries objective questions.