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How Does Mobile Payment Processing Work?

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michael bedwell
How Does Mobile Payment Processing Work?

The idea of mobile payment processing seems simple enough. The user downloads an app on their smartphone and then uses that app to pay at the store. When they're ready to check out, they open the app and tap on their preferred method of payment: credit card, debit card, or cash account. Then they scan the QR code at checkout and they're done. But there's a lot more to it than that, and most people don't understand the concept in its entirety. Even if they have used mobile payment methods before, they might not know how the process works or what technology powers it.


Mobile payment processing relies on Near Field Communication (NFC) technology . It is a way to send data from one device to another using radio waves. NFC technology is built into a lot of smartphones and can communicate across short distances with other devices that have NFC chips embedded in them. It works a lot like a radio signal: the transmitter sends a signal which changes when it hits its target, thereby allowing for communication between two devices.


Many people are surprised to learn that NFC technology has actually been around longer than they might think. The first version was developed in the early 1990s, but it wasn't turned into a product until 2002 when Sony created the FeliCa chip , which is still used in products in Japan today. You can find these chips embedded in many commuter passes and other types of smart cards, as well as mobile devices.


The first smartphone to come with NFC capability was the Nokia 6131. Released in 2006, it could be used to make small payments (like vending machine purchases) and even pair up with Bluetooth headsets . But although there were a few early adopters, the technology didn't really take off until Apple announced that the new iPhone would come with built-in NFC.

This announcement set off a race among other smartphone manufacturers to include NFC technology in their products as well, and soon many people began using it for daily tasks. It's now commonplace to see people paying for bus fares, train tickets, snacks at the local deli, and in some places even buying a cup of coffee with their smartphones.


How Mobile Payment Processing is Changing the Future?

On a larger scale, mobile payment processing has been changing the way industry does business. In fact, it's predicted that by 2018 there will be more NFC-enabled devices than people on earth . This means that many businesses are starting to look into NFC technology because it could improve their existing business models—or even create new ones.


NFC-enabled devices have already given rise to the so-called "sharing economy," where people share goods and services without having to interact with each other beyond using their devices. For example, you can use your phone to buy a shared bike and leave it at any designated stop, as you would with the bus. You can also use ride-sharing apps like Uber or Lyft without having to speak to anyone directly—all you do is tap on your phone each time you need a pickup and dropoff location.


NFC chips have also been used in vending machines for years. For example, some vending machines will only sell chips if you deposit money in them using an NFC-enabled device. Mobile payment processing has also changed marketing and advertising with the ability to transmit data directly from one person's phone to another's .


The Future of Payments

It is clear that mobile payment processing is changing the way people do business, and it can also be used for personal reasons. In fact, mobile payment processing has become so popular that apps have been developed just to make life simpler. There are a number of pretty great apps out there which will allow you to scan a QR code instead of having to type in a long internet address each time you want to visit a website.


Today, there are also mobile payment processing apps like Google Wallet and Apple Pay which make it possible to pay for goods and services in stores instead of using (or even carrying) cash or credit cards. And several banks have started testing an app that will allow people to turn their phones into debit cards . There's even a company called Square which allows small businesses to accept credit card payments, and a startup that will allow you to order food from your favorite restaurants without having to place a phone call.

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