Categorized | internet marketing

Are Mobile Payment Solutions Really the Way of the Future for E-Commerce?

You may have seen a few pieces of online news about mobile payment solutions and wondered whether you should implement them on your website. Some articles even go as far as claiming that mobile payments are the way of the future and will revolutionize the online commerce industry. But is there any truth to these claims, or is it just marketing hype to get yet another “start up” run by a 19 year old entrepreneur from his basement off the ground?

When talking about mobile payment solutions, we first need to clear up one thing in order to avoid any potential confusion. There are actually two kinds of mobile payment options currently available in the online world. The first one is simply a type of mobile wallet that is linked to the customers credit card. The buyer can easily make transactions from their mobile phone without revealing their card information, but the purchase is still charged to their credit card as usual. The second kind involves charging the amount of the transaction to the buyer’s mobile phone bill or deducting it from their prepaid balance on their mobile account. The second one is the type that we will be addressing in this post.

First, let’s understand how the system works. The client wants to make a purchase online. They then enter their cell phone number into a secure form on an e-commerce site. They then receive a text message with information about the transaction (such as the cost) and will need to confirm they accept the charges, either by replying to the message or more commonly, by entering a code that is sent with the message onto the merchant’s website. They then have access to the product or service that they’ve ordered and the merchant will get paid by the payment processor later on, just like with a credit card transaction.

Sounds easy, right? The system is designed to allow for easy and smooth transactions with minimum risk to both the merchant and the customer. Using such a payment system has many advantages for both parties. It is good for buyers who don’t have a credit card or are reluctant to use theirs on an online commerce site, as it provides them with an alternative payment solution. It’s also a very good way to pay online for small purchases that are delivered directly to the buyer’s computer or for online services that don’t require any physical items to be shipped.

But should you run and implement this method of payment on your website immediately? The answer will depend on a few factors. As convenient as mobile payments may be, they are still far from being a perfect solution in all cases and it’s also important that merchants understand their potential disadvantages and not only look at the plus side. Tomorrow we will go into more details on the inner workings of mobile payments, which will be very helpful if you just started an e-commerce site and want to provide buyers with as many choices for payment as possible.

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