It is traditionally accepted that traveling with cash can be dangerous. Once hard currency is lost, it can be difficult to find and impossible to replace. Travelers’ checks and credit cards offer more security and insurance when it comes to handling money abroad, but there still exists an inherent risk of loss, fraud and theft. When a check is lost or destroyed, the security of an account can be compromised – resulting in potentially long term damage to your finances. The same can be said of credit cards. Combined with the typical replacement time it takes to receive a new card should the original be lost, the headache, hassle and delays can be disastrous.
Advances in technology have provided those possessing wanderlust with a new and unexpected alternative to the more traditional means of paying for goods and services while traveling. In the fashion of so many other processes we rely upon during the course of our daily lives, managing payments has turned mobile. Cell phones have become more dynamic and useful than their humble beginnings, and their application in the realm of making purchases seems a natural progression.
How Does Payment By Mobile Phone Work?
There are several methods in which a cell phone can be used to make a payment, and some of them may come as a surprise.
Direct Mobile Billing
Perhaps the most well-known of these methods is known as direct mobile billing. Using this process, the customer’s purchase is added to their cell phone bill, and is included in the total amount due in the monthly billing cycle. This is most frequently used for e-commerce vendors – typically for the purchase of games, ringtones and other similar online purchases.
Online “Wallets”
This method has increased in popularity steadily as a means of paying for purchases online, and many providers have seen success by adding mobile apps for on-the-go convenience. Companies such as PayPal, Google and Amazon have all made it possible to use their services from your cellular phone. The use of a personal identification number (PIN) allows for added security and efficiency.
Contactless Near Field Communication
This is newest, and perhaps most innovative method of using a mobile phone to make purchases. One of the primary differences between near field communication and other methods of payments is the fact that NFC is used to make purchases from physical vendors such as retail stores, restaurants and transportation providers. This requires that a user’s phone be specially equipped with a smartcard that communicates with a reader module used by the vendor. This card is linked with a prepaid account, bank account, credit card or the user’s mobile account, allowing for an automatic debit transaction.
While the potential for this method of payment is high, it does face some particular challenges with development. The infrastructure necessary to make NFC payments viable on a worldwide scale will be massive and highly complex. Despite having the support of some big-name mobile phone manufacturers and banking organizations, it is unlikely that the world will see immediate, exponential growth in this process.
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