What Is a Mobile Payment?

Mobile payment refers to the use of electronic products such as mobile phones by mobile clients to make electronic money payments. Mobile payments effectively combine the Internet, terminal devices, and financial institutions to form a new type of payment system. Mobile payments are not only able to make currency payments , Can also pay living expenses such as phone bills, gas, water and electricity. Mobile payments have created new payment methods and made electronic money popular. ^[1]

Chinese name: Mobile payment
Foreign name: mobile payment
Aka: Mobile payment

Media: Mobile terminal
Types of: A payment method
On behalf of: Alipay, WeChat

Mobile payment definition

Mobile payment refers to the use of ordinary or smart phones to complete or confirm payment, rather than cash, bank cards or checks. Buyers can use mobile phones to purchase a range of services, digital products or goods. ^[2]

Mobile payment is a new type of payment method in the Internet era. It takes mobile terminals as the center and pays for products purchased through mobile terminals. The main form of mobile payment is mobile payment. ^[3]

Mobile payments are a derivative of third-party payments. The so-called third-party payment means that in a transaction through a third-party payment platform, after the buyer purchases the product, he uses the account provided by the third-party platform to pay for the payment, and the third party notifies the seller that the payment has arrived and dispatches the goods; after the buyer inspects the item, The seller is notified of the payment and the third party transfers the money to the seller's account. Some researchers believe that third-party payment essentially acts as a credit intermediary to provide certain credit protection for transaction payment activities, thereby eliminating credit risk problems caused by asymmetric information between buyers and sellers. ^[4]

Mobile payment features

(1) The space-time limit is small.

Mobile payment in the Internet era breaks the time and space restrictions of traditional payment, enabling users to perform payment activities anytime, anywhere. Traditional payments are mainly cash payments, which require face-to-face payments between users and merchants. Therefore, there are significant restrictions on the time and place of payment; mobile payments are mainly mobile payments, and users can use mobile phones to perform payment activities anytime, anywhere Limited by time and space, for example: users can carry out shopping and payment activities at online malls such as Taobao at any time. ^[3]

(2) Convenient management.

Users can perform various payment activities through mobile phones anytime, anywhere, and manage personal account inquiry, transfer, payment, recharge and other functions. Users can also know their own consumption information at any time. This provides great convenience to users' lives, and it is more convenient for users to manage personal accounts. ^[3]

(3) Higher privacy.

Mobile payment is when a user binds a bank card to a mobile phone. When performing payment activities, a payment password or fingerprint is required, and the payment password is different from the bank card password. This makes mobile payment better protect the privacy of users, and its privacy is higher. ^[3]

(4) Higher comprehensiveness.

Mobile payment has a high degree of integration, which provides users with many different types of services. For example: users can pay water, electricity and gas bills at home through their mobile phones; users can use their mobile phones to manage their personal accounts; users can use their mobile phones to perform various payment activities such as online shopping. This reflects the high degree of integration of mobile payments. ^[3]

Mobile payment payment types

The current classification of mobile payments mainly includes the following three:

According to the amount of payment, mobile payments can be divided into small payments and large payments. Micro-payment business refers to the cooperation between the operator and the bank to establish an account for pre-stored expenses, and the user issues a transfer instruction on the mobile communication platform to pay the fee on its behalf. Large payment refers to binding a user's bank account with a mobile phone number, and the user performs a transaction operation on a bank card bundled with the mobile phone in various ways. ^[5]

Mobile electronic payment can be divided into remote payment and on-site payment according to whether the payer and payee are at the same site when paying. For example, ringtones purchased through a mobile phone are remote payments, while beverages purchased on a vending machine through a mobile phone are paid on the spot. ^[5]

According to different implementation methods, mobile payment can be divided into two types: one is to complete the payment through remote control such as short message and WAP. The other is to complete payment through short-range non-contact technology. The main short-range communication technologies are RFID, NFC, Bluetooth, 802.11, etc. ^[5]

Mobile payment payment process

In the process of using mobile payments. It involves the following four aspects: consumers, merchants, financial institutions, and mobile operators. Mobile operators

Mobile payment Payment management system provides premise and possibility in the whole mobile payment process. Maintaining every link in the mobile payment process is an important part with core tie-in functions. First, a consumer sends out a signal instruction for product selection and purchase. This instruction is sent to a merchant's commodity transaction management system through the use of a wireless operator's payment management system. Secondly, after receiving the consumer's instruction to select the purchase of goods, the merchant sends the instruction back to the consumer's mobile phone terminal for confirmation through the wireless operator's payment management system. Only when the consumer and the response to the confirmation operation receive the purchase instruction The operation will continue, otherwise the operation will be considered invalid and terminated. The wireless operator payment management system will only perform detailed recording of transaction records after receiving the operation instructions confirmed by consumers. At the same time, it will also issue instructions to financial institutions to perform payment clearing between consumers and merchants, and notify Merchants provide transaction services. The last link is the initiative of the merchant to provide the physical product or service purchased by the consumer. ^[6]

Impact of mobile payments

(I) Impact of mobile payment on consumers

For consumers, we can scan the QR code directly in the physical store and make payment easily. There is no need to carry cash, no change, no need to swipe the card to sign, which greatly saves our time, and can avoid the trouble caused by the problem of counterfeit currency. In addition, these third-party payment platforms often do online activities such as full reductions and grabbing red envelopes, which not only give us discounts, but also bring us a lot of fun; In addition, through fast transfers of mobile payments, we can easily achieve life Payment, ticket purchase, mobile phone recharge, etc., can truly handle various services without leaving home; in addition, third-party payment institutions also have functions such as wealth management, education, public welfare, shopping and entertainment, and third-party services To meet our needs at different levels, it has greatly enriched our lives. ^[7]

(II) Impact of mobile payment on merchants

For merchants, the development of mobile payments also brings many benefits. First of all, low mobile payment fees increase the profitability of merchants. In addition, merchants can use WeChat and Alipay to offer full and random money reduction activities, which can not only increase the turnover, but also expand the effectiveness of publicity Promote the establishment of business reputation. ^[7]

(Three) the impact of mobile payment on ATM manufacturers

Mobile payment builds a bridge between buyers and sellers, bringing great convenience to consumers and merchants' lives. However, the rise of mobile payments will also have an impact on many other industries. For example, for ATM manufacturers, mobile payment objectively replaces cash transactions, and the main function of ATM is to provide cash, inquiries, and transfers, which can be completed on mobile phones anytime, anywhere. Therefore, the development of mobile payment has caused a great impact on related industries such as ATM machines. Although the development of city commercial banks and rural commercial banks will make the traditional ATM industry still have room for growth in the short term, in the long run, the demand for ATMs from the public will still decrease. Related equipment manufacturers need to diversify their layouts and transform into smart devices. . Not only that, card makers are also affected, and more virtual cards may appear in the future. Different from ATM manufacturers, the current card volume is still growing, and the development of mobile payment is just a potential crisis for the card manufacturing industry, which has not yet appeared. However, card makers should be at ease and actively look for countermeasures. ^[7]

(IV) Impact of mobile payment on commercial banks

Most of the bank's grassroots practitioners have not realized the impact of mobile payment, and even think that the reduction of ATM machines will actually reduce the bank's operation and maintenance costs and improve the quality of the bank's profit. Under the impact of third-party payment platforms such as Alipay and WeChat Pay, the business volume of various commercial banks has fallen sharply. At present, mobile payment can truly make payments anytime, anywhere, and in any way. It not only solves the problem of small payments, but also solves large payments. It can replace cash and check functions. It can also generate alternative credit card functions. Open a bank. In addition, due to the efficient and fast third-party platform and low service costs, it is more popular with the public, which has greatly affected the bank's business.

Banks and third-party platforms have multiple businesses that overlap, including settlement business, payment business, retail business, money transfer business, deposit and loan business, and wealth management business, and these businesses are also the main sources of income for banks. Frictions between the two parties over many issues, such as market space and profit distribution, have gradually disrupted the originally balanced cooperation environment. The competition between the two has become increasingly fierce, and the impact on commercial banks has also increased. ^[7]

Mobile payment risk

Types of mobile payment risks

(1) Technical risks

At present, mobile payment operation models mainly include operator-dominated models, banking institution-dominated models, and non-bank payment-dominated models. No matter what kind of operation mode, mobile payment is realized on the basis of cooperation between all parties in the mobile payment industry chain. The mobile payment industry chain is relatively long and involves multiple industries such as banks, non-bank institutions, clearing institutions, and mobile device operation related institutions. In the technical implementation of emerging mobile payment issues, the only security aspects include physical security, network security, host security, application security, data security, business continuity, and so on. In terms of the realization of these security elements, some technologies are mature, and some technologies are still being explored, especially barcode payment technologies (including payment tokenization, validity period control, barcode anti-counterfeit identification, etc.). In the development of mobile payment, some payment innovations ignore the rigor of transaction verification in order to achieve user-friendliness and the speed of payment transactions. Payment risks exist in every link, especially identity verification in payment transactions. There is a risk of payment. Whether the relevant rules are strictly enforced, and whether each process is strictly tested and repeatedly verified, are all important. ^[8]

(Two) legal risks

Emerging payment forms have different types of technical risks and legal risks. The formulation of any law is a long and rigorous process, but the formulation of policies must be timely and in line with the development requirements of the times. At present, China's mobile payment related laws and regulations are constantly being improved, but the pace is slightly behind. Many new things can only be found in the application and problems can be found and regulated by legislation. The same is true of mobile payments. Due to its long industrial chain and many industries involved, the standards and standards of each industry are different, and there may even be overlaps and conflicts. The inconsistencies in standards and specifications easily lead to the adoption of different industry standards by members of the mobile industry chain, and there are payment loopholes and hidden dangers, which in turn breed mobile payment risks. Therefore, whether to take control measures appropriate to the level of risk should also be considered. ^[8]

(Three) application risk

In the application process of mobile payment tools, there are certain risks on both sides of the payment transaction. For example, if the payment QR code is maliciously dropped and the payment QR code is read maliciously; in addition, the mobile terminal device itself exists. Risks: If the mobile phone itself does not use security measures such as encryption, criminals steal user information through phishing websites or Trojan horse programs, and illegally copy mobile payment functions, causing the leakage of important user information. It can be seen that the identification of the parties involved in the transaction in mobile payment applications is also a risk point. ^[8]

Mobile payment risk prevention

(I) Strict implementation of relevant technical specifications

In terms of mobile payment risk prevention and control, we should pay attention to risk prevention and control in system security, transaction security, data protection, and internal control management. In addition to completing transactions in accordance with business processes at the technical level, we must also comply with the country and the people in the transaction process. Relevant technical standards and specifications issued by banks to ensure transaction security and information security of mobile payment services. ^[8]

The first is the generation and acceptance of barcodes in mobile payments. The bank account or payment account, ID number, and mobile phone number used by the customer to generate the bar code should be associated with the management, and the combination should only select the elements known to the customer (such as a static password), or the non-copyable elements held only by the customer ( (Such as digital certificates, electronic signatures), and one-time passwords generated and transmitted through secure channels, or the customer's own biometrics (such as fingerprints) and other verification elements, each payment transaction should have strict verification measures. ^[8]

Second, in the mobile payment industry chain, for mobile equipment providers, technology implementation and upgrading should never stop. On the one hand, mobile payment methods are constantly evolving, and mobile device providers must have a certain vision of technological research and development, and add hardware protection functions or production and supply functions to the mobile terminal itself to meet the different needs of mobile payment. On the other hand, the loss of mobile devices is inevitable. How to protect the user's interests from loss or reduce losses to the greatest extent is also a problem that mobile device providers need to think about. At the same time, other technical aspects should also strictly implement national and industry-related laws and regulations. ^[8]

(2) Establish and improve relevant laws and regulations

Aiming at the risks of mobile payment, in addition to technical security measures, the establishment and improvement of laws and regulations must also keep pace with the development of science and technology. As the management agency of payment business, the People's Bank of China has issued a series of management measures and technical standards and specifications in accordance with the Cyber Security Law of the People's Republic of China, such as the China Mobile Financial Payment Payment Tokenization Technical Specifications, Client-side Technical Specifications, and Testing Specifications. "Barcode Payment Security Technical Specifications" "China Financial Integrated Circuit Card Specifications" "Technical Requirements for Payment Services Facilities of Non-Financial Institutions" "Bank Card Acceptance Terminal Security Specifications" "General Specifications for Online Banking System Information Security" "Network Payment Message Structure and Element Technical Specifications. The establishment of these specifications laid a legal foundation for the risk prevention of mobile payments. But objectively speaking, in the development of mobile payment, industry self-discipline is also particularly important, and industry standards should be continuously formulated and updated to facilitate the promotion of mobile payment applications. Therefore, it is recommended to implement national-level legislation on mobile payment as soon as possible to improve the personal privacy data protection system and top-level design management of the mobile payment industry. Promptly introduce data security management rules and technical standards for operating companies in the field of Internet information services and financial payments, and strengthen the security management of user privacy data including biometrics. ^[8]

(3) Popularize and raise awareness of safety precautions

Mobile payment security involves every participant in the payment transaction. The improvement of security awareness will greatly reduce the incidence of mobile payment security accidents and improve the overall security level of the mobile payment industry. For merchants and consumers who are most closely related to mobile payment applications, mobile payment is also a major area where risks are frequent while providing convenience. When using mobile payment to collect payments, merchants should pay attention to the security of mobile payment tools, and pay attention to checking every transaction at any time to protect their own interests. When consumers use mobile payment for payment, they do not casually connect to unknown WiFi for payment activities, and do not scan unknown QR codes at will. Consumers confirm with the merchant every time they scan a code to reduce risk. Therefore, it is urgent to actively cultivate a healthy mobile payment market and strengthen the awareness of national security prevention. ^[8]

Mobile payment application

1. Shopping

With the rapid development of e-commerce, people are more and more enthusiastic about purchasing clothing through e-commerce platforms, which saves time and effort, and also promotes the development of mobile payment. With the rapid development of mobile payment, in addition to online shopping, various large-scale shopping malls and even small clothing stores and jewelry stores on the streets have begun to provide consumers with mobile payment methods such as code scanning. Nowadays, people can directly buy the clothes they want to buy through their mobile phones; they can go out shopping without cash; they can directly pay by mobile payment; and they no longer have to worry about the dilemma that they do nt have enough money when they choose the goods while shopping. ^[3]

2. In terms of diet

With the rise and development of various catering application software, such as: Meituan, are you hungry and other online ordering platforms, mobile payment has begun to enter the catering industry, which has brought great benefits to people who do not or are not willing to cook. The convenience of the university also provides benefits for the college student group. Consumers can place an order and pay directly from the online food ordering platform, and then wait for takeaway at home or in the dormitory. Of course, in addition to online catering platforms, all types of offline catering restaurants, regardless of their size, have gradually begun to use mobile payment methods, such as Shaxian snacks, Yihetang, KFC and so on. ^[3]

3. In life

With the development of mobile payment platforms such as Alipay, mobile payment has also begun to expand its scope. Today, people can pay water, electricity and gas at home through mobile payment platforms such as Alipay and WeChat Pay; they can buy wealth management products and insurance; they can pay mobile phone bills; they can transfer services to others; they can check themselves anytime, anywhere for a week, Consumption in January or even a year; even in some cities, mobile payment can be used to go to the grocery market. In addition, mobile payment platforms have many functions. The continuous development of mobile payment has brought convenience to people's lives. ^[3]

4. In terms of travel

Nowadays, people can also use mobile payment methods for travel. For example: Didi Travel, bike sharing and other mobile travel platforms. People can choose to take a private car, a taxi, etc. on the platform, or they can ride a bicycle on their own. Of course, taking a bus is also a daily way of travel. The combination of the mobile travel platform and the mobile payment platform has brought great convenience to people's travel, and people no longer have to worry about the issue of loose change when taking a bus. ^[3]

Problems with mobile payments

1. The coverage of mobile payment is not comprehensive

Nowadays, although mobile payment is developing rapidly, it has not yet spread to every citizen in major cities. The main reason is that the operation steps of mobile payment platforms are not easy and easy to learn. At the same time, due to the low coverage of remote Internet in rural and mountainous areas, mobile payment cannot be popularized in these areas. In addition, even after the Internet is covered in remote areas, taking into account the cultural level and learning ability of these areas, the operation method of mobile payment also needs to be specially taught. ^[2]

2. There are major security risks in mobile payment

Due to the rapid development of mobile payment, the security guarantee system is not yet complete, and it is vulnerable to attacks by Trojans and hackers. However, the mobile payment platform has a large amount of memory.

Mobile payment User personal information and consumption records, and once these are obtained by criminals, the consequences will be unthinkable. Not only will the user s personal privacy be violated, but the detailed data of China s citizens income and expenditure will also be leaked. If security risks are not removed, mobile payments will not be stable development of. ^[2]

Mobile payments are more easily used by people with a liking, and become a weapon to cheat others' money. Not long ago, such a thing happened. A new user of a certain mobile payment platform went to the physical store to pay and settle. The other party was informed that the merchant did not receive the money. The user was required to provide his own barcode number to make the normal payment. However, when the merchant After obtaining the user's barcode information, all the money in the user's account was automatically deducted, and the merchant did not acknowledge the incident afterwards, causing heavy losses to the user. It can be seen that the results of mobile payment platforms being used by conscientious people are unthinkable, and the security risks of mobile payment platforms need to be solved urgently. ^[2]

3. The impact of mobile payments on banknotes

Mobile payment uses electronic money in transaction engineering. As this payment method gradually becomes popular, the circulation of banknotes will definitely decrease, and people will use banknotes less and less. So some people have proposed: "Mobile payment means Will eventually replace banknotes. "Although this statement is not unreasonable, because electronic money exists in the invisible, unlike banknotes have the risk of wear and loss, while electronic money in the mobile phone software will not take up extra money like banknotes space. However, the saying that "paper money will be eliminated" is too absolute. It is self-evident that the consumption of paper money is the traditional way of consumption. Therefore, mobile payment will have an impact on banknotes in the future continuous development and become the mainstream of payment methods, but it will not completely replace banknotes. ^[2]

4. Lack of corresponding laws and regulations

Although mobile payment has broad development prospects, China's corresponding laws and regulations have not been improved accordingly. China has formulated relevant laws and regulations, including the Measures for the Management of Electronic Banking Services, The Measures for the Management of Payment Services of Non-Financial Institutions, and the Electronic Signature Law of the People's Republic of China, but these laws and regulations are too general to provide specifics for mobile payments. The operation specifications of the company lack practical guidance for mobile payments. At the same time, in the supervision of mobile payments, the regulatory responsibilities of various departments are not clearly defined, which easily leads to the phenomenon of unclear supervision or cross-regulation. In addition, the subject of mobile payments varies with their payment models, which leads to their supervision. The subject is uncertain. ^[3]

5.Consumer traditional payment habits

China has a huge population. Although some consumers in China currently trust mobile payment that brings convenience to their lives, a large number of consumers retain the traditional cash payment habit without using mobile payment. Means for settlement payment. Although China's mobile payment has developed rapidly and its service range has been continuously expanded, consumers' trust in mobile payment is still low, resulting in a low penetration rate. It can be concluded that the consumer's concept and habit has restricted the development of mobile payment. ^[3]

Development status of mobile payment

1. Competition among payment platforms

As early as 1999, the earliest domestic mobile payment has appeared. In 2002, UnionPay introduced a mobile phone SMS payment model, which is convenient for users to inquire and pay with their mobile phones. From 2011 to 2012, China Unicom, China Mobile, and China Telecom successively set up e-commerce companies. At the same time, Alipay launched the barcode payment business, which opened the prelude to mobile payment. Since then, a large number of mobile payment platforms such as WeChat Pay, JD.com, and TenPay have emerged. The functions of each platform are similar to users. Each payment platform competes for users with advantages such as red envelopes, low risk, and wide use. Led by Alipay, multiple payment platforms are competing for development. ^[2]

2.Cooperation between payment platforms and fund companies and banks

After we become a user of a payment platform, we often purchase financial products derived from this payment platform. For example, as an Alipay user, I will regularly transfer a certain amount of money to Yu'ebao, so that I can spend at any time. You can also get some benefits, which is very convenient. Fund companies use the payment platform to obtain users, and the payment platform uses the benefits that the fund company brings to users to increase the user adhesion of the platform itself and obtain profits from it. The cooperation between payment platforms and banks can be said to be a setback. At first, when mobile payment was just emerging, banks refused to provide financial assistance to mobile payment platforms because they feared that mobile payment would replace banking business. After the rise of mobile payment on a large scale, the rapid development of mobile payment caused banks to readjust their attitudes and consider the development relationship between mobile payment and banks. Therefore, "On August 15, 2018, Bank of China and China United Bank signed a strategic cooperation in mobile payment in Beijing. At the same time, the agreement also launched the cloud flash payment theme promotion month campaign. "From this, we can see that the development of mobile payment is unstoppable, and the cooperation between banks and mobile payment is the best choice, both of which have their own advantages. Form complementary advantages and jointly contribute to economic and social construction. ^[2]

Mobile payment development trends

1.Enter the cashless era

With the continuous popularization of mobile payment and the continuous development of payment platforms such as Alipay and WeChat Payment, more and more users have begun to use mobile phones for mobile payment. Nowadays, people rarely bring cash to go out. After all, mobile payment can be used to make payments everywhere. For example: people can scan codes for meals, scan codes for meals, scan codes for fun, and codes for shopping. payment. Mobile payment has fully penetrated into people's lives, and sometimes people only need a mobile phone to play. From this point of view, China will enter the cashless era. ^[3]

2. Pay attention to information security

As mobile payments continue to penetrate into people's lives, people will pay more and more attention to their information security issues. The mobile payment platform is associated with people's bank cards and saves personal privacy information. Once this information is leaked, it will bring a lot of trouble to people's lives, such as: personal property may be stolen and property security cannot be guaranteed. , May be harassed, which affects normal life and so on. This also reflects the importance of information security for mobile payments. With the continuous improvement and development of mobile payment technology in the future, the information security factor of mobile payment will gradually increase. ^[3]

3. Expanded mobile payment coverage

In addition to the rapid development of mobile payment in China, its upsurge has already spread abroad, and mobile payment platforms such as Alipay and WeChat Pay have gradually started to rise abroad. With the rise and development of cross-border e-commerce, domestic consumers can purchase various foreign products through cross-border e-commerce platforms anytime and anywhere, and of course, they need to settle payments through mobile payment platforms. In addition, in terms of outbound tourism, domestic consumers can also book foreign hotels and air tickets through Ctrip, Tongcheng and other travel e-commerce platforms. This also requires settlement payment through mobile payment platforms. This shows that the coverage of mobile payments is gradually expanding. ^[3]