Mobile payments are defined as payments made using a mobile device to initiate, authorize and confirm an exchange of currency in return for goods or services. This being a new mode of payment is a phenomenon that is taking the world by storm. It may be no small feat that since the concept of making mobile payments emerged, in the US alone, all leading retailers (such as Wal-Mart, Best Buy, Jewel Osco) have adopted to this smart technology and accepting payments through mobiles. But the question arises, how the mobile payment apps work and how safe are they for you to choose this form of payment method as your preferred choice. To answer, let’s see this technology in detail.
For beginners, the mobile payment technology makes use of NFC Chips that are powered within your smart phone. However, if your cell phone does not have the NFC technology, one can always purchase an external NFC chip, that is pasted on the back cover of the cell phone.
But let’s now drill-down the exact steps involved in making mobile payments:
How Mobile Payment App Work
1: Setting Up Your Mobile Wallet:
The first thing you want to do for making mobile payments is setting up your Mobile Wallet. This involves installing a mobile payment app (such as Google Wallet), on your smartphone. This application will sync details about your financial institution (your bank), or Credit Cards, even your Debit Card or Online Account (Pay Pal/ Payoneer etc.). Note that the applications usually add their own security features to protect your account information. You can further restrict access to your mobile wallet through a PIN or a Password. This brings us to a third component, the “Security Element”.
2: NFC (Secure) Chip
As discussed before, the smart card chip or NFC chip is where the actual account information is stored. This is an entirely different memory component that is isolated from the on-board storage of the smartphone for apps, pictures, videos and other files. Hence, accessing the NFC chip is restricted to only certain approved apps; and hence the NFC based technology provides an added security layer for your sensitive data.
3. Trusted Service Manager (TSM)
The Trusted Service Manager (TSM) is a role that acts as a neutral broker and enables the communication between your mobile network operators, phone manufacturers or other entities controlling the secure element on mobile phones. However, remember, this is a background process that facilitates your mobile payment capability. The core function of TSM is to manage the process of acquiring your financial data and authorizing it for secure payment processing. This core component hence also monitors your financial accounts during the process of payments; and validates your acceptability for the retailer during transaction. So, once the TSM syncs through your mobile wallet and on to your financial accounts on your phone, you are good to go!
Typical NFC Based Payment Process
4. Making Your First Purchase!
With your mobile wallet up and running you are now ready to make your first purchase using mobile wallet. To reiterate, all that’s left to do now is to tap your Smart Phone with the NFC Reader found with the merchants/retailers.
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Making Payments is Easy!
