Payment Law Advisor Legal Commentary and Resources for the Payment Industry

Evolution of the Mobile Landscape: Classification of Emerging Mobile Payment Systems

Posted in Deals and Technology

With the exponential growth of smartphone sales, start-ups and established technology and financial service companies alike are seeking to launch innovative mobile payments solutions. Such programs may leverage the existing mobile infrastructure, such as short messaging service (SMS), introduce new technology, such as near field communication (NFC), or take a hybrid approach by combining existing payment card types with NFC. This landscape is rapidly evolving and while there are many variations, most of the current mobile payments systems can be grouped according to their main feature or technology. The chart below provides a snapshot of some the current mobile payments initiatives and sample providers of such systems. To create this matrix, we looked at many mobile payment systems that are currently being used as well as some that have yet to be launched commercially, and divided them into five categories based on their core features. In addition, our “Mobile+” category includes technologies that are ancillary to mobile payments or payment innovations in a particular industry. For purposes of our classification, we focused more on the features and technology most apparent to the user and less on the regulated structure underpinning the system. Many other classifications are possible.

As companies continue to innovate, it may be increasingly difficult to neatly classify payment systems in such categories – even the current systems present quite a challenge. For example, of the mobile payment systems that aim to eliminate or transform the point of sale queue at a supermarket or restaurant, some solely accommodate merchant acceptance by turning any mobile wireless device, including tablets, into a credit card reader, while others allow a customer to pay the amount due using the customer’s mobile device. However, many of these wireless POS payment and acceptance systems as well as contactless POS payment systems can facilitate peer to peer money transfers and the ability to earn and burn loyalty points. The lines drawn between many of these systems may disappear if consumers demand more options from each payment system to avoid maintaining a specific application or technology to use each payment feature.

Click on the chart to view it in full screen: