{"id":2341,"date":"2015-06-01T22:46:43","date_gmt":"2015-06-01T22:46:43","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&p=2341"},"modified":"2015-10-05T20:39:59","modified_gmt":"2015-10-05T20:39:59","slug":"mobile-commerce-and-mobile-payment-systems","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-introbusinesswmopen\/chapter\/mobile-commerce-and-mobile-payment-systems\/","title":{"raw":"Reading: Mobile Commerce and Mobile Payment Systems","rendered":"Reading: Mobile Commerce and Mobile Payment Systems"},"content":{"raw":"

Mobile Commerce<\/h2>\r\nThe phrase\u00a0mobile commerce<\/strong>\u00a0was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean \"the delivery of electronic commerce capabilities directly into the consumer\u2019s hand, anywhere, via wireless technology.\"\u00a0Many choose to think of Mobile Commerce as meaning \"a retail outlet in your customer\u2019s pocket.\"\r\n\r\nMobile commerce is worth US$230 billion, with Asia representing almost half of the market, and has been forecast to reach US$700 billion in 2017.\u00a0According to BI Intelligence\u00a0in January 2013, 29% of mobile users have now made a purchase with their phones. Walmart estimated\u00a0that 40% of all visits to their internet shopping site in December 2012 was from a mobile device. Bank of America predicts\u00a0$67.1 billion in purchases will be made from mobile devices by European and U.S. shoppers in 2015. Mobile retailers in UK alone are expected to increase revenues up to 31% in FY 2013\u201314.\r\n

Mobile Payment<\/h2>\r\nMobile payment<\/strong>, also referred to as mobile money, mobile\u00a0money transfer, and mobile wallet generally refer to payment services operated under\u00a0financial regulation\u00a0and performed from or via a\u00a0mobile device. Instead of paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods. Although the concept of using non-coin-based currency systems has a long history,\u00a0it is only recently that the technology to support such systems has become widely available.\r\n\r\nMobile payment is being adopted all over the world in different ways.\u00a0In 2008, the combined market for all types of mobile payments was projected to reach more than $600B globally by 2013,\u00a0which would be double the figure as of February, 2011.\u00a0The mobile payment market for goods and services, excluding contactless\u00a0Near Field Communication\u00a0or NFC transactions and money transfers, is expected to exceed $300B globally by 2013.\r\n\r\nIn\u00a0developing countries\u00a0mobile payment solutions have been deployed as a means of extending financial services to the community known as the \"unbanked\" or \"underbanked,\" which is estimated to be as much as 50% of the world's adult population, according to Financial Access's 2009 Report \"Half the World is Unbanked.\"\r\n

Near Field Communications (NFC)<\/h3>\r\nHave you ever wondered what makes tap-and-go services like\u00a0Apple Pay<\/a>,\u00a0Google Wallet<\/a>\u00a0and\u00a0Amiibo<\/a>\u00a0work? As much as it seems like pure magic, it isn't. So what is it exactly? Simply put, it's a method of wireless data transfer that detects and then enables technology in close proximity to communicate without the need for an Internet connection. It's easy, fast, and works automagically.\r\n\r\nNo pairing code is necessary to link up and because it uses chips that run on very low amounts of power (or passively, using even less), it's much more power-efficient than other wireless communication types. At its core, NFC works to identify us by our enabled cards and devices (and by extension, our bank accounts and other personal info.)\r\n\r\nNFC chips stocked inside credit cards for contactless payments is nothing new. But a more recent and admittedly more enticing use case for NFC is with your smartphone, which can digitize your entire wallet. Virtually every mobile OS maker has their own apps that offer unique NFC functionality. Android users have the widest variety to choose from. First off, US users can nab Google Wallet, which accesses your funds for contactless payments.\u00a0Samsung Pay<\/a>, which operates similarly, is on the way for Samsung phone users in the United States and Korea this Summer.\r\n\r\nHowever, a feature that all Android owners have been able to enjoy is called Android Beam<\/a>. It was implemented in\u00a0Ice Cream Sandwich<\/a>\u00a04.0 as a nifty, simple process that allows for the transfer of photos, contacts and directions that works by holding two phones together.\r\n\r\nApple's\u00a0iPhone 6\u00a0and\u00a0iPhone 6 Plus\u00a0received NFC functionality, albeit with limited use so far, only for Apple Pay. It's a lot like Google Wallet, in that it's an app which gives users the ability to pay for goods and services at participating retailers. Lastly, those who prefer Microsoft's Windows Phone will be able to use\u00a0Microsoft Payments<\/a>\u00a0when it launches likely around the launch of Windows 10.\r\n\r\nWhichever device you have, it's likely that a local supermarket, train station, taxi or coffee shop supports contactless payments via your phone's NFC chip. Go try it out! Simply hold it close to a contactless payment terminal and instantly, like swiping a credit card, the payment will complete.\r\n\r\nLooking toward the future, it's possible that NFC chips could be used to replace every card in your wallet. That means the unique info on your frequent shopper loyalty cards, library card, business cards and the like could be contained and transmitted simply via NFC.\r\n

Forms of Mobile Payment<\/h2>\r\nApple Pay<\/strong> is a\u00a0mobile payment\u00a0service that lets certain Apple mobile devices make\u00a0payments\u00a0at retail and online checkout. It digitizes and replaces the\u00a0credit\u00a0or\u00a0debit magnetic stripe card\u00a0transaction at\u00a0credit card terminals. The service lets Apple devices wirelessly communicate with\u00a0point of sale\u00a0systems using a\u00a0near field communication\u00a0(NFC) antenna, a \"dedicated chip that stores encrypted payment information\" (known as the Secure Element), and Apple's\u00a0Touch ID\u00a0and\u00a0Passbook.\u00a0The service is compatible with the\u00a0iPhone 6, iPhone 6 Plus, and the\u00a0Apple Watch. Users with\u00a0iPhone 5,\u00a05C,\u00a05S,\u00a06, or\u00a06 Plus\u00a0can use the service through an Apple Watch, though the watch lacks the added Touch ID security.\u00a0By default, Apple Pay is disabled, and the owner must enter a code to enable Apple Pay after putting on the watch. The watch's sensors will then ensure that it is still being worn by its owner. If the watch is removed at any point, then Apple Pay is disabled again.\r\n\r\nThe service keeps customer payment information private from the retailer, and creates a \"dynamic security code [ . . .] generated for each transaction.\"\u00a0Apple added that they would not track usage, which would stay between the customers, the vendors, and the banks. Users can also remotely halt the service on a lost phone via the\u00a0Find My iPhone\u00a0service.\r\n\r\nTo check out at\u00a0brick and mortar\u00a0stores, users hold their authenticated Apple device to the point of sale system. iPhone users authenticate by holding their fingerprint to the phone's Touch ID sensor,\u00a0and Apple Watch users authenticate by double clicking a button on the device.\u00a0There will be 220,000 participating vendors at the time of launch, including department stores\u00a0Macy's\u00a0and\u00a0Bloomingdales, drugstores\u00a0Walgreens\u00a0and\u00a0Duane Reade, restaurants Subway\u00a0and\u00a0McDonald's, and other retailers including\u00a0Target\u00a0and\u00a0Whole Foods.\u00a0To check out online in supported mobile apps, users choose \"Apple Pay\" as their payment method and authenticate with Touch ID.\u00a0Groupon,\u00a0Panera Bread, and\u00a0Uber\u00a0apps will be compatible with Apple Pay at the service's launch. Users can add credit cards to the service in any of three ways: through their iTunes accounts, by taking a photo of the card, or by entering the card information manually. The service will only work in the United States, though Apple plans to expand to other countries.\r\n\r\nhttps:\/\/youtu.be\/3n1c73Etquo\r\n\r\nGoogle Wallet<\/strong>\u00a0is a\u00a0mobile payment\u00a0system developed by\u00a0Google\u00a0that allows its users to store\u00a0debit cards,\u00a0credit cards,\u00a0loyalty cards, and\u00a0gift cards\u00a0among other things, as well as redeeming\u00a0sales promotions\u00a0on their mobile phone.\u00a0Google Wallet can use\u00a0near field communication\u00a0(NFC) to \"make secure payments fast and convenient by simply tapping the phone on any\u00a0PayPass-enabled terminal at checkout.\"\r\n\r\nGoogle demonstrated the app at a press conference on May 26, 2011.\u00a0The app was released in the United States only on September 19, 2011.\u00a0The service works with the 300,000 plus\u00a0MasterCard PayPass\u00a0merchant locations,\u00a0with\u00a0Visa\u00a0licensing their\u00a0Visa payWave\u00a0system to Google for use in Wallet as of September 20, 2011.\u00a0On May 15, 2013, Google announced the integration of Google Wallet and\u00a0Gmail, allowing users to send money through Gmail attachments.\u00a0Like the main service, Google Wallet's Gmail integration is also currently only available in the United States, to those 18 or older.\u00a0On February 23, 2015, Google announced that it would acquire the intellectual property of the carrier-backed competitor\u00a0Softcard\u00a0and integrate it into Google Wallet, and that\u00a0AT&T Mobility,\u00a0T-Mobile U.S., and\u00a0Verizon Wireless\u00a0would bundle the Google Wallet app on their compatible devices later in the year. The effective merger aims to build a stronger competitor to the recently introduced\u00a0Apple Pay\u00a0mobile payment service.\u00a0The new service will be known as\u00a0Android Pay.\r\n\r\nWhere this new technology will lead the world economy and its impact on the existing monetary system remains to be seen, but we are certain it will continue to evolve rapidly!\r\n\r\n \r\n

Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered in this section. This short quiz does not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/171","rendered":"

Mobile Commerce<\/h2>\n

The phrase\u00a0mobile commerce<\/strong>\u00a0was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean “the delivery of electronic commerce capabilities directly into the consumer\u2019s hand, anywhere, via wireless technology.”\u00a0Many choose to think of Mobile Commerce as meaning “a retail outlet in your customer\u2019s pocket.”<\/p>\n

Mobile commerce is worth US$230 billion, with Asia representing almost half of the market, and has been forecast to reach US$700 billion in 2017.\u00a0According to BI Intelligence\u00a0in January 2013, 29% of mobile users have now made a purchase with their phones. Walmart estimated\u00a0that 40% of all visits to their internet shopping site in December 2012 was from a mobile device. Bank of America predicts\u00a0$67.1 billion in purchases will be made from mobile devices by European and U.S. shoppers in 2015. Mobile retailers in UK alone are expected to increase revenues up to 31% in FY 2013\u201314.<\/p>\n

Mobile Payment<\/h2>\n

Mobile payment<\/strong>, also referred to as mobile money, mobile\u00a0money transfer, and mobile wallet generally refer to payment services operated under\u00a0financial regulation\u00a0and performed from or via a\u00a0mobile device. Instead of paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods. Although the concept of using non-coin-based currency systems has a long history,\u00a0it is only recently that the technology to support such systems has become widely available.<\/p>\n

Mobile payment is being adopted all over the world in different ways.\u00a0In 2008, the combined market for all types of mobile payments was projected to reach more than $600B globally by 2013,\u00a0which would be double the figure as of February, 2011.\u00a0The mobile payment market for goods and services, excluding contactless\u00a0Near Field Communication\u00a0or NFC transactions and money transfers, is expected to exceed $300B globally by 2013.<\/p>\n

In\u00a0developing countries\u00a0mobile payment solutions have been deployed as a means of extending financial services to the community known as the “unbanked” or “underbanked,” which is estimated to be as much as 50% of the world’s adult population, according to Financial Access’s 2009 Report “Half the World is Unbanked.”<\/p>\n

Near Field Communications (NFC)<\/h3>\n

Have you ever wondered what makes tap-and-go services like\u00a0Apple Pay<\/a>,\u00a0Google Wallet<\/a>\u00a0and\u00a0Amiibo<\/a>\u00a0work? As much as it seems like pure magic, it isn’t. So what is it exactly? Simply put, it’s a method of wireless data transfer that detects and then enables technology in close proximity to communicate without the need for an Internet connection. It’s easy, fast, and works automagically.<\/p>\n

No pairing code is necessary to link up and because it uses chips that run on very low amounts of power (or passively, using even less), it’s much more power-efficient than other wireless communication types. At its core, NFC works to identify us by our enabled cards and devices (and by extension, our bank accounts and other personal info.)<\/p>\n

NFC chips stocked inside credit cards for contactless payments is nothing new. But a more recent and admittedly more enticing use case for NFC is with your smartphone, which can digitize your entire wallet. Virtually every mobile OS maker has their own apps that offer unique NFC functionality. Android users have the widest variety to choose from. First off, US users can nab Google Wallet, which accesses your funds for contactless payments.\u00a0Samsung Pay<\/a>, which operates similarly, is on the way for Samsung phone users in the United States and Korea this Summer.<\/p>\n

However, a feature that all Android owners have been able to enjoy is called Android Beam<\/a>. It was implemented in\u00a0Ice Cream Sandwich<\/a>\u00a04.0 as a nifty, simple process that allows for the transfer of photos, contacts and directions that works by holding two phones together.<\/p>\n

Apple’s\u00a0iPhone 6\u00a0and\u00a0iPhone 6 Plus\u00a0received NFC functionality, albeit with limited use so far, only for Apple Pay. It’s a lot like Google Wallet, in that it’s an app which gives users the ability to pay for goods and services at participating retailers. Lastly, those who prefer Microsoft’s Windows Phone will be able to use\u00a0Microsoft Payments<\/a>\u00a0when it launches likely around the launch of Windows 10.<\/p>\n

Whichever device you have, it’s likely that a local supermarket, train station, taxi or coffee shop supports contactless payments via your phone’s NFC chip. Go try it out! Simply hold it close to a contactless payment terminal and instantly, like swiping a credit card, the payment will complete.<\/p>\n

Looking toward the future, it’s possible that NFC chips could be used to replace every card in your wallet. That means the unique info on your frequent shopper loyalty cards, library card, business cards and the like could be contained and transmitted simply via NFC.<\/p>\n

Forms of Mobile Payment<\/h2>\n

Apple Pay<\/strong> is a\u00a0mobile payment\u00a0service that lets certain Apple mobile devices make\u00a0payments\u00a0at retail and online checkout. It digitizes and replaces the\u00a0credit\u00a0or\u00a0debit magnetic stripe card\u00a0transaction at\u00a0credit card terminals. The service lets Apple devices wirelessly communicate with\u00a0point of sale\u00a0systems using a\u00a0near field communication\u00a0(NFC) antenna, a “dedicated chip that stores encrypted payment information” (known as the Secure Element), and Apple’s\u00a0Touch ID\u00a0and\u00a0Passbook.\u00a0The service is compatible with the\u00a0iPhone 6, iPhone 6 Plus, and the\u00a0Apple Watch. Users with\u00a0iPhone 5,\u00a05C,\u00a05S,\u00a06, or\u00a06 Plus\u00a0can use the service through an Apple Watch, though the watch lacks the added Touch ID security.\u00a0By default, Apple Pay is disabled, and the owner must enter a code to enable Apple Pay after putting on the watch. The watch’s sensors will then ensure that it is still being worn by its owner. If the watch is removed at any point, then Apple Pay is disabled again.<\/p>\n

The service keeps customer payment information private from the retailer, and creates a “dynamic security code [ . . .] generated for each transaction.”\u00a0Apple added that they would not track usage, which would stay between the customers, the vendors, and the banks. Users can also remotely halt the service on a lost phone via the\u00a0Find My iPhone\u00a0service.<\/p>\n

To check out at\u00a0brick and mortar\u00a0stores, users hold their authenticated Apple device to the point of sale system. iPhone users authenticate by holding their fingerprint to the phone’s Touch ID sensor,\u00a0and Apple Watch users authenticate by double clicking a button on the device.\u00a0There will be 220,000 participating vendors at the time of launch, including department stores\u00a0Macy’s\u00a0and\u00a0Bloomingdales, drugstores\u00a0Walgreens\u00a0and\u00a0Duane Reade, restaurants Subway\u00a0and\u00a0McDonald’s, and other retailers including\u00a0Target\u00a0and\u00a0Whole Foods.\u00a0To check out online in supported mobile apps, users choose “Apple Pay” as their payment method and authenticate with Touch ID.\u00a0Groupon,\u00a0Panera Bread, and\u00a0Uber\u00a0apps will be compatible with Apple Pay at the service’s launch. Users can add credit cards to the service in any of three ways: through their iTunes accounts, by taking a photo of the card, or by entering the card information manually. The service will only work in the United States, though Apple plans to expand to other countries.<\/p>\n