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Towards a clearer definition of mobile payment
Mobile payments are a hot topic in financial, telecommunication and technology circles right now. However, professionals across these industries have not yet come to a clear and mutually agreed definition and classification of mobile payments. This lack of agreement and specifically the bundling of payments with other processes such as ordering and delivery creates confusion and slows the development in this field. In this section a proposal is made to view payments separately from other functions that can be performed with the mobile device. Additionally a simple classification of mobile payments by location and funding method is offered. In section 3 of this report, classifications are examined more closely and several alternative possibilities are offered for classifying mobile payment methods.
2.1 What exactly is a mobile payment? One of the issues with mobile payments in the market today is the lack of a clear and shared definition across the industry. There is often confusion and overlap between a mobile payment, mobile banking, and the use of the mobile phone to simply order goods or receive delivery (while paying by other means). There are four main areas for the use of a mobile phone in the context of a financial transaction. These are:
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Mobile order – transactions where the mobile phone is used simply to initiate the order (but not to make the payment). Mobile payment – a payment (transfer of funds in return for a good or service) where the mobile phone is involved in the initiation and confirmation of the payment. The location of the payer is not important: he may or may not be ‘mobile’ or ‘on the move’ or at a Point of Sale.
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Mobile delivery - transactions where the mobile phone is used simply to receive delivery of goods or services, e.g. an event ticket (but not to make the payment).
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Mobile authentication – use of the mobile device to authenticate the user either as part of a payment transaction or to give access to some information or functionality.
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Mobile banking – access to banking functionality (query + transaction) via the mobile phone. This includes the provision of part or all of the banking functionality already provided by banks over the Internet in the form of online banking.
In our definition initiating a payment such as a bank transfer while within the bank’s provided mobile banking environment would not be classified as a mobile payment but for the sake of simplicity would remain simply a feature of mobile banking.