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How Mobile App Payment Works?

Any transaction made with a mobile device is referred to as a mobile payment. Mobile payments provide convenience as well as security. No wonder, this technology is showing no signs of slowing down and hence it becomes imperative for everyone to know about it.


A Mobile Payment is a financial transaction that is made for goods or services using a portable electronic gadget such as a tablet or cell phone. A person can use their mobile phone to pay for a variety of services, instead of cash, check, or credit card. Mobile payments can include both Mobile wallets , and mobile money transfer.

Because they are safe, quick, and handy, mobile payments are becoming an increasingly popular method of accepting in-person payments. Businesses who have successfully integrated mobile payments into their payment infrastructure, whether online or offline, have earned a competitive edge.


The history of mobile payment technology may be traced back to 1983, when electrical engineer Charles Walton was granted the first patent for an RFID device (Radio frequency identification), the technology on which most mobile payments are based.

Coca-Cola introduced mobile payments in 1997 with just a small number of vending machines. Google launched Google Wallet in 2011, allowing Android users to pay with their phones at certain retailers in the United States, and since then, this technology has expanded swiftly all over the world.


The most well-known mobile payment mechanisms are Mobile Wallets and NFC payments. Further, there are several more forms of mobile payments, such as: Payments through QR code , UPI Money Transfer, and Mobile-to-mobile transactions.


A Mobile Wallet is an application that retains the user’s credit or debit card information so that customers may pay for their purchases using the device. To use a mobile wallet, the user must first install a mobile wallet app on their smartphone and then enter their card information. Once the data is retained, payment can be made via wallet. To use a mobile wallet to make a payment, the user takes his phone close to the Point-of-Sale equipment (POS), which must be equipped with NFC technology. Apple Pay, Google Pay, and Samsung Pay, are examples of popular mobile wallets.

NFC-Near field Communication

NFC, which stands for “Near Field Communication” is the technology that supports mobile wallet payments. NFC is what allows two devices, such as your phone and a payment reader, to connect wirelessly while they are in close proximity.

NFC is a subset of RFID (Radio-frequency Identification), a technology that allows us to identify objects- A reader device captures digital data encoded in RFID tags or smart labels using radio waves. RFID has been used for a long time to scan products at grocery shops and luggage at airports.


Mobile wallet payments are commonly referred to as contact-less payments because there is no physical touch between your smartphone and the payments reader.

Hold your smartphone close to the NFC-enabled payments terminal to pay using your mobile device. To initiate the transaction, the reader device must be within 2 inches of the source (cell phone). In a mobile wallet transaction, your smartphone and the NFC-enabled point of sale are essentially communicating with each other. They transfer encrypted information back and forth using a precise radio frequency , to conduct the payment. This all happens in a matter of seconds. In fact, one of the most appealing aspects of NFC payments is its speed.

In a mobile payment transaction, there is also something called Tokenization which has a key role. The token is made up of a randomly generated alphanumeric ID that replaces the 16-digit credit card number. Tokenization is one of the reasons mobile payments are so secure, since this technology protects the bank details of the user. This implies that your phone’s account information cannot be turned into something significant to fraudsters.


  • Mobile-to-mobile payments enable rapid and safe payments with the use of a mobile phone number. As long as both parties are registered to the same service, users can sign up for mobile-to-mobile services and transfer and accept payments.

  • A bank’s Mobile Banking service allows its clients to do financial activities electronically, such as mobile bank transfers, using a mobile device. Mobile bank transfers may include P2P (person-to-person) transfers, payments to other people, as well as bill payments.

  • Payment Via QR Code: The term QR code refers to a form of matrix barcode developed in 1994 for the Japanese auto industry. Since then, it has been utilised in a variety of scenarios, including as a mobile payment mechanism- QR Code Payment. Through their own app, the user scans the seller’s unique QR code shown on the seller’s app. The user then verifies the amount to be paid and taps to complete the transaction. When a QR code is scanned, the software on the user’s smartphone decodes the horizontal and vertical patterns of the matrix. When they are captured using the phone’s camera, they are turned into a string of characters. Following the processing of the information, the phone may, among other things, launch a browser link, authenticate payment details, and validate location.

  • UPI Payment: UPI stands for Unified Payment Interface. It allows money to be transferred immediately from one bank account to another using a mobile phone. Payments can only be done using the app on a mobile device, and the facilities are available 24X7. You must have a bank account with a member bank to utilise UPI, which means your bank must permit you to utilise the UPI service. Once you’ve verified if your bank accepts UPI payments, you’ll need to download a UPI-compatible app on your smartphone. BHIM, which is created by NPCI-National Payments Corporation of India, is one of the most widely used applications for UPI payments, although there are also some private companies such as Paytm, PhonePe, Google Pay, Amazon Pay, and others.

  • PayTm is one of the most commonly used apps for Mobile money transfers. The reason for this is that the Paytm Payment Gateway accepts a variety of payment options from users. Credit cards, debit cards, online banking, UPI, and Paytm Wallet are among the options. The user can flexibly choose the option which is comfortable for them.

Apart from these well-known payment methods, such as PayTm or Google Pay, users have a variety of other online payment options to consider, each offering a simple and safe checkout experience.

  • PayPal- PayPal is a simple and quick way to send and receive money over the internet. You may send money to relatives, friends, and internet stores, from anywhere in the world. To transfer money to relatives or friends, all you need is the recipient’s email address. You may transfer payments using the Send and Request Money option after registering your credit card or bank account with your PayPal account. The funds will be credited to the recipient’s account. You can pay with PayPal if you purchase online and see the PayPal logo on the merchant’s website. Simply choose PayPal as your payment method during the checkout process. You’ll be required to log into your account and confirm the transaction.

  • ApplePay- For people who use Apple products, Apple Pay serves as a mobile wallet and a one-click payment option on websites that support it. Customers may now use their touch identification to check out using Apple Pay on their mobile devices. It also employs tokenisation to keep the user data secure, and is completely free for both user and the merchant .

  • 2Checkout- It is a worldwide payment processing system that takes payments in a variety of currencies from all over the world. It provides an API that enables integrating the processing solution into your website straightforward while also allowing you to alter it as needed. For the users, it provides comprehensive fraud protection and a flexible design that allows them to check out on any device.

  • Stripe- Stripe is an online payment processing platform that enables a company to accept credit card payments in seconds and deposit them immediately into the company’s bank accounts. Credit card payments, recurring payments, subscription billing, Apple Pay, and a variety of other payment methods are all supported by Stripe.

The shift from cash to cashless is now a reality, at least among a significant part of users. Because of the industry’s rapid expansion, businesses are spending extensively in mobile payment technologies. We’re moving toward more secure, authenticated , speedier and convenient payment methods. Additionally, many governments are urging banks to develop infrastructure to enable safe mobile payments in rural regions, which presents an excellent opportunity for companies. With these developments in place, the future of mobile technology seems promising. More automated payment alternatives and capabilities may be predicted, ranging from mPOS(mobile Point-of-sale) , Biometrics, and AI.

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