Tag Archive | "Mobile Payment"

How Mobile Payment Solutions Work: Part 2

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How Mobile Payment Solutions Work: Part 2


You’ve now learned a lot more about how mobile payment solutions work online and what they’re good for. But before you implement them as a method of payment on your site, there are a few final considerations that you would need to keep in mind. This will let you know what you can expect if you want to use mobile billing with your online business.

Everyone Gets a Share of the Action

Getting the funds from the customer’s mobile account into your hands may seem simple in theory, but the reality is far more complex than that. There are thousands of mobile carriers around the world. In order for a payment processor to be able to collect money from them, they need to go through some rather complex networks of financial agreements and clearinghouses. Of course, this means that they will discount a fee for each transaction made. So you can’t really expect to get the full $5 if a customer makes a $5 purchase on your site. Due to the fact that billing to a mobile is far more complex than billing to a credit card, the fees charged to merchants are usually very high. For each transaction, you can expect to receive only 40 to 70% maximum of the total amount that was actually paid for by the customer. Now there is a possibility that the system will change in the future and more efficient networks will be set up to deal with collecting the payments and forwarding them to the merchants, but for now, high transaction fees are simply part of the game and it will probably stay that way for a few years at least.

Getting Paid is Slow

Don’t expect to get the money in your bank the next day, or even next week. In fact, settlement for all transactions can take anywhere from 30 to 90 days after they were made. This is because the payment processor needs to collect the funds from each mobile phone carrier before they’re able to pay you as a merchant.

On the Bright Side, Fraud and Chargebacks are Low

When a customer disputes a mobile billing transaction with their carrier, due to the low amounts involved, most simply have a policy of crediting the customer the amount they’re disputing and giving them information on how to cancel the subscription. This happens quite often when a teenager buys a few dozen songs or items for an online game and then claims not to know anything about it when his parents get the mobile bill. Therefore, unless there is evidence that a merchant attempted to mislead customers about the cost of the transactions or otherwise deliberately engaged in malicious business practices, chargebacks, although theoretically possible, are very rare.

With all the information presented here, you should have a clearer picture of what accepting mobile payment entails to you as a merchant and can now make a better decision as to whether or not you will want to accept them on your website.

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

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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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