Mobile Payment

The use of payment method has attracted the attention of many large and small businesses in the world. In this article, we will look at the wallet (mobile wallet) in Sweden. The companies that sell automated cars, the premium payment department and some of the coffee shops in Sweden are among the companies that receive NFC payment. Payments associated with an independent mobile phone operator will make customers easily place their mobile phone at the POSE device and perform their transaction.

Now in Sweden, it is possible to buy products from vending machine devices with NFC technology.

Payments on automated sales devices are seen as a good start. Increasing this future will lead to more mobile phone production with NFC capability. With the expansion of equipment in the near future, the mobile payment will become a routine payment method.

The traditional payment methods in the world can be divided into 4 parts:

The key factors that make mobile payment users alternative to other methods are as follows:

•  Ease of use: The degree to which the end-user could use the solution with least effort. For vending machine industry, it should be as easy as the cash payment system. The customers could use the method with a few lines of simple instruction.
• Cost effectiveness: The extra transaction cost that contributes to the final price of the product. It is particularly important for micro payment market, where a small price hike could lead to sustainable lost of customers.
• Reliability: The solution should operate with minimum fault in normal condition as well as withstand unexpected circumstances. This criterion is very important due to its link to finance and the distrust of the customers for the new payment method.
• Security: The solution relates to the protection of payment details and customers’ identity besides preventing business fraud to happen. In short, it should cover the issues of anonymity, privacy and non-repudiation.
• Flexibility: This criterion takes into account how the new solution could be integrated with other payment methods. Besides, the solution could reach bigger pool of customer if it could work independently with the type of equipment the customers have.
• Maturity: The high maturity level of a solution could not ensure the success of its application with vending machine, yet it will reduce the technological risks during deployment.
• Speed of payment process: The speed of payment process in vending machine has to be very fast as the customer could not wait patiently for a micro payment transaction and get frustrated with delay.
• Scalability: The payment system should be easily scaled whenever, wherever it needs to be. If the solution requires a costly change in the legacy payment system or time-consumed maintenance, it could not be used effectively and efficiently with vending machine industry.
• Social acceptability: The new payment process could highly be affected by the market acceptance, which mostly comes from public’s prior knowledge and previous experiences with existing mobile payment method. In Sweden, mobile payment based on premium SMS has been widely implemented and used in the public transportation ticket system. It inevitably gives premium SMS method the edge over other competing methods in public opinions.

A car sales engine is equipped with a GSM module for sending and receiving information. When purchasing an automated sales car (device ID + product ID), the mobile network operator will send the mobile network operator, user authentication including account type, account balance (if prepayment is used), customer temporary ID (for more security) and so on. The automated machine then accepts the order received from the MNO (Mobile Network Operator) and prepares or rejects the item for shipping, and informs the mobile operator.

Vendors, if they want to implement this mobile payment method, they should consider the following items:

Costs

1. Hardware and Software modifications cost for the existing vending machines with mobile payment support;
2. The cost of training for old and new employees to carry on daily operational and maintenance;
3. Provide technical and customer support for mobile payment for vending machine transaction;
4. Divide sales profits with telecom operators.

Benefits

1. Initial investment
2. In addition to creating a company's value added, customer satisfaction will be gained
3. The number of employees or their wages will be reduced

Impacts

1. Customer: Aware of a more convenient and friendly way of payment as they could be confident and worry-free about their pockets when purchasing goods from vending machines.
2. Merchant (Infrastructure Vendors): Open a new channel of payment that could increase the pool of potential customers and as thus increase the total revenue for the merchant. The new payment method also helps to reduce the billing cost for collecting/distributing coins as well as ensure the integrity of company’s financial data.
3. Mobile Operators: Open opportunity to optimize mobile traffic and average revenues per user (ARPU). They could also be benefited from the shared revenues with merchants.
4. Society: Change social pattern and opinion toward mobile payment. Thus it will increase the successful chance to introduce new innovative solutions to the society in the future.

Risks

1. Market: A potential problem of insufficient critical mass could make mobile payment service profitable and sustainable. The problem lies in acceptance of customers with the new payment method. The cooperation between MNOs and merchants in sharing revenues could be complicated. The new payment solution should also comply with governmental policies as well.
2. Technology: Undiscovered security breach that could prevent the solution to exist; Better payment procedures will be introduced in the near future that could make mobile payment solution unprofitable; Unexpected difficulty to integrate new mobile payment solution with existing vending machines and current payment method.

Undoubtedly, this payment method will lead to an increase in the customer's future and will lead to the development of business strategies. For example, at international airports, if a passenger needs to buy anythings, he/she should have cash in the country where he/she was present. However, in the mobile payment method (due to the financial transaction through the international roaming agreement), the passenger can use his/her wallet to make a purchase and the cost will be deducted from the passenger account. Although using this method of payment of a cash transaction will decrease, but financial integration and new customers will increase.

Mobile payment method as an optional payment method of purchasing from vending machine is accepted by most of the people in Sweden. And most of the people will use it if there is no extra fee by using mobile payment method, however, if there is extra fee, then much less people will still use it. So the report recommends the vendors to introduce the mobile payment method with no additional charges for users. 12.6% of the respondents refuse to use the mobile payment method for vending machine, and their reasons roughly distributed evenly among four reasons which are technical complexity, inconvenience, unstable payment medium and insecure payment medium. So from this analysis, vendors should choose carefully in order to maximally avoid these problems and attract more customers.