Mobile Payments: A Better Way to Pay!

402 Project

Subject: Session 39: Mobile Payments: A Better Way to Pay!

This is a disruptive, thought-provoking, even controversial session that educates everyone in the B2B and B2C payment ecosystem that there is a “better way to pay” utilizing mobile devices. Panelists compare and contrast mobile payments with traditional methods to highlight advantages. They discuss a proposed “Mobile Payments Bill of Rights” to keep everyone using this new ecosystem accountable. The panel also discusses “tokenization” and multi-tiered security that gives transactors the best payment experience, coupled with the tightest security-- as selected by payor.

Argumentative: Why should it be a better way to pay?

• Comparison with Traditional payments
• Security
• Consumer- business experience

- Costs / profits.

• Competitive landscape

Costs and profits & competitive landscape

        Aside from the convenience to customers, mobile payments are gaining popularity for many consumers and businesses because of the costs effectiveness and profit they realize. From retailers to food trucks, they all have a point of sale equipment to process their transactions. Now, these POS systems are formatted into two segments: hardware and software. This is where we can see a fluctuation in terms of costs for the company. Typically merchants will pay fixed and variable costs to an acquirer, either a financial institution or a private company such as Moneris for example. The fixed costs entail the installation of the point of sale. Variable costs include the communication line for processing transactions. In the latest years, we went from magnetic cards to chip cards in Canada, which required merchants to adopt EMV terminals. The acronym stands for Europay, MasterCard and Visa, referring to the chip enabled technology. One benefit from these terminals is that it allows contactless purchases through NFC (Near-field Communication), which represents an important segment of mobile payments. (Fiel Larry, 2017).  

        There are three separate technologies for mobile payments: Near-field communication (NFC) that we just mentioned earlier. Second one is Barcodes and quick response (QR) and lastly cloud based mobile payments (mobile payments processing, 2017). Independently, they bring cost efficiency for businesses. With EMV terminals allowing NFC payments, workers can process transaction faster and email receipts, which improves sales and cut paper expenses. (Vantiv, 2017) Although QR technology is less popular, the mobile scans the product information and the seller ask for payments via the QR code, which contains pre-filled information. Once it is scanned, a secure fund transfer takes place. Thus, the merchant doesn’t even need a POS, which amounts to no maintenance costs, no receipts, which saves paper costs and it also diminishes the risk of fraudulent cards. Lastly, cloud-based payments also hinder similar cost savings as it allows merchant to store the data on a virtual server. When the purchase is done, the information is sent over Internet where the data is encrypted. (InfraSoftTech, 2017)

        Traditional payments methods revolve around Credit, Debit and cash. Each of these represents expenses for the merchant that can be diminished with mobile payments. Credit Institutions will charge the company a fee for offering the service. These fees vary around 1.5% to 3% of the purchase. Even though for consumers it represents an incentive as financial institutions will promote credit usage using cash back policies, bonus points etc., Now, for debit purchases, it’s a vice-versa situation where it costs less for the business, where Interac charges 0.06$ per transaction to the merchant. However, for the consumer, using the debit card is seen as an expense where the financial institutions charge transactions fees to them. Either they pay a bundle for a number of transaction per month or pay additional fees for any additional transaction. Thus, mobile payments would be a solution to decrease these fees.(Interact, 2017)