Mobile Payments

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History of Payment Methods

The history of different payment methods

From Ancient Egyptian times to the 21st century, there have been around five different payment methods. From cash to mobile payments (M-Payment), payment methods has become increasingly convenient and technological.

The first paper money was used by the Chinese during the Tang Dynasty.[1]. However, it took another century or two for paper money to spread to the rest of the world. Whether it is B2B or C2B, face to face trade used paper money for trading physical goods. The first cheques were used by the Romans starting in 1st century BC. The cheque is known as prescriptions[2]. However, the volume of cheques used peaked in the early 1990s.

The first charge card was introduced by Western Union in 1914. Western Union opened the first charge account for its customers and provided them with paper identification. Many large department stores opened store charge accounts for their customers using paper identification. This enabled the customer to make purchases on credit provided by the store. However, these accounts could be used only within the store that issued them. Payment cards have only been considered an acceptable payment tool since the 1950s. Due to the wide acceptance from the recipients, the card became a significant P2P payment tool during that time period.

The first electronic movement of money was through the telegraph. Through digitization, the size and speed of money flow significantly increases. Online commerce’s existence is another force that promotes the money transfer, as it gives people the freedom to send money anytime and anywhere without the need to go to a physical bank branch.

In 1997, the first mobile payment was offered via SMS in Finland. Coca-Cola introduced a limited number of vending machines where the customer could make a mobile purchase. The customer would send a text to the vending machine to initiate payment and the machine would then vend their product.[3]

What is Mobile Payment

Mobile payment (M-Payment) includes mobile money, mobile money transfers, and the mobile wallet. In other words, all the P2P and C2B transactions for physical goods and services that are made using a mobile device is M-Payment. Therefore, the M-Payment can be defined as the process of two parties exchanging financial value using a mobile device in return for goods or services.

Types of M-Payment

Location-based payments can be categorized as

    Remote Transactions

    Remote payment is initiated with a mobile device that is independent of the consumer’s location. It includes money transfer and online payment. For example, international payment in the form of mobile money transfers across international borders.

    Proximity/Local Transactions
    Proximity payment is made in close distances without making any physical contact with a corresponding device. For example, holding two phones near each other to transfer money between two friends, or paying a metro ticket by holding the phone to a reader. In addition, the use of the mobile phone could also be the equivalent to a credit or debit card (mobile wallet) or as a point-of-sale (PoS) terminal.

Technology-based payments can be categorized as

    SMS payment

    SMS payment is using text messages to pay for products or services. To pay, the customer can simply send a SMS message. In return a code or password is sent to them, enabling access to the premium content. The mobile phone carrier will then add the cost to the user’s normal monthly bill, or deduct it from the prepaid balance.

    How NFC is used

    Near Field Communication (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer using a mobile phone equipped with a smart card holds the phone near a reader module. Most transactions do not require authentication, but some may require the use of a PIN or fingerprint, before the transaction can be completed. The payment can then be deducted from a pre-paid account or charged to a mobile or bank account directly.

    The mobile phones don’t have to touch the point of sale, but they do have to be fairly close, within four inches (or 10 cm) of each other to work.

    QR code payment

    QR Codes are square bar codes. QR stands for “Quick Response”. Barcodes were designed to contain the meaningful information right in the bar code. QR Codes can be of two main categories: The QR Code is presented on the mobile device of the person paying and scanned by a POS or other mobile device of the payee. Or the QR Code is presented by the payee, in a static or one time generated fashion and it’s scanned by the person executing the payment.

    WAP payment

    WAP Payments simply mean that the Wireless Application Protocol (WAP) facility on your Smartphone is used to connect and use an online payment method such as PayPal, Google Wallet or Yahoo Wallet. For the internet, it is simply entering your credit card details into the payment box on a company’s website.

Difference between mobile payment and digital wallet

Currently, many different stakeholders such as device makers, financial institutions and other companies are trying to participate in M-Payments. Generally, most companies start as a digital wallet. Users can link bank accounts, loyalty cards and even ID documents such as a driver’s license and health card to the smartphone. In addition, users can also store cinema tickets, coupons and so on.

Apple Wallet

Apple Pay has a few different functions compared to Apple Wallet. Apple Wallet allows users to store their reward cards and tickets while Apple Pay allows users to load their bank cards and make payments. With Apple Wallet, users can use passes on iPhone to check into flights and get or redeem coupons. Passes can include useful information like the balance on the coffee card, coupon expiration date, seat number for a concert and much more.[4]

Google Wallet

On February 23, 2015, Google acquired carrier-backed competitor Softcard and the effective merger resulted in the new service known as Android Pay.[5][6] Separate from Android Pay, Google Wallet now allows peer-to-peer transactions for cases such as splitting the cost of shared expenses, reimbursing others, keeping track of joint spending, or giving money as a gift or loan. While Android Pay is only available to Android users, For those using Android, the two products together (Android Pay and Google Wallet) offer a comprehensive payments management system, a “tool for staying in charge of the bank account.”[7]

North America M-Payment

Samsung Pay


Samsung Pay is a M-Payment and digital wallet developed by Samsung. It allows users to make payments using compatible phones and other Samsung-produced devices. Samsung Pay was first released in South Korea on August 20, 2015 and has launched its services in another five countries, including United States, China, Spain, Singapore, Australia and Brazil. Later this year, Samsung Pay alsois expected to be released in the UK, Malaysia, Canada, Russia and Hong Kong.[8]

Samsung Pay utilizes both NFC and MST technology, allowing it to be used on both NFC and swipe enabled payment terminals. This allows its users to pay almost anywhere, from the grocery store to the coffee shop to their favorite department store. Samsung Pay can also work on most of phone carriers around the world. For example, in the US, the supported carriers includes AT&T, Sprint, Cricket and other major carriers. However, one issue with Samsung Pay is that the payment method only works on selected Samsung produced devices, such as Galaxy S7 and S6 models, Galaxy A5, A7, A9, and Galaxy Note 5.

Samsung Pay makes transactions extremely easy. Firstly, users swipe up to launch the app and secure with their fingerprint. The user then holds their device over the card reader when they are ready to pay. A security feature of Samsung Pay is that it doesn’t store or share users’ payment information in the phone. In addition, the payment information is not accessible without your fingerprint or Samsung Pay PIN, making the app very secure. If the device is lost or stolen, users can remotely lock or erase the payment cards in Samsung Pay via the Samsung Find My Mobile service. When the user locks Samsung Pay using Find My Mobile, all payments will be disabled on the stolen/lost device. Alternatively, user can choose to erase their entire device and/or removable storage.[9]

Samsung Pay has various add-on features. For example, users can add up to 10 payment cards on multiple supported devices. In addition, users can make a up to 10 payments without Wi-Fi/Cellular connections.[10] It also makes returns and refunds easier for users, and the process is similar to the purchase steps.

Since its first launch, Samsung Pay has processed over $1 billion in transactions in South Korea. The number of supported banks has increased from four to 300 major banks in seven different countries:

  • In South Korea, Woori bank allows Samsung Pay users to withdraw cash from selected ATMs.[11]
  • In US, Samsung Pay corporates with major financial institutions, such as American Express, Mastercard, and major banks including Citibank, Chase to provide a large range of service for Americans.[12]
  • In China, it corporate with china’s largest financial institution, Union Pay, and major banks, such as Bank of China and China construction bank
  • In Spain, Imagin bank and Caixa Bank supports Samsung Pay’s service.
  • In Singapore, major banks such as DBS and OCBC bank supports
  • In Australia, only selected cards from Citibank and American express supports Samsung Pay
  • In Brazil, the service will launch with major issuers including Banco do Brasil, Brasil Pré-Pagos, Caixa, Porto Seguro, and Santander.

Gift Card Support

Now with Samsung Pay, users can purchase, send, and redeem gift cards from a growing selection of their favorite retailers. Users can enjoy gift card support from 100 different merchants, such as Gap, GameStop, Banana Republic, Staples, Toys R Us, Regal cinemas, Whole Foods, eBay and so on. When it comes to organizing the cards inside the app, gift cards will be neatly stacked in a separate tab so users would not get them mixed up with your credit and debit cards.[13]

The addition of gift cards is a major step forward for Samsung Pay, especially since it has noteworthy competition from the likes of Apple Pay and other M-Payment apps. Apple Pay, for instance, supports reward cards and coupons, but has yet to support gift card.[14]

Developing Relationship With Alipay For Expansion in China

Samsung has struck a partnership with Alipay, China's biggest payments service, run by Alibaba affiliate Ant Financial. Samsung looks to expand its footprint in the world's second-largest economy. After signing into the Alipay account in the Samsung Pay app, users can choose to pay with a simple tap or scan the QR code. Samsung Pay users can pay by swiping up from the Lock Screen, selecting the Alipay QR code and process tap-to-pay transaction.[15]

Currently in China, QR code is more common than the NFC and MST technology. With partners like Alipay, Samsung Pay provides Chinese consumers with a simpler option with unparalleled access, choice and flexibility, creating more incentives for consumers to use Samsung Pay. In China, Alipay has around 450 million users and processes 170 million transactions per day. Samsung looks forward to connecting with the large user base of Alipay and helping to stoke adoption of the Samsung payment technology as it battles Apple’s share in China.[16]

Apple Pay


Apple Pay is a M-Payment developed by Apple. The payment design is based on the Apple Wallet and supports selected Apple produced devices, such as iPhone 6 or later, Apple Watch paired with iPhone 5 or later, iPad Pro, iPad Air 2 or later. The payment method was first announced on September 9th, 2014 and first launched in the United Kingdom on July 14th, 2015. Today, Apple Pay is available in the US, Canada, Australia, China, Singapore, Switzerland, France and Hong Kong. It launched in Canada on November 17, 2015. Apple Pay is expected to launch in Spain later this year with the support from American Express.[17]

The payment uses both NFC and MST technologies in order to maximize the user’s accessibility. To complete the purchase, users need to authorize the transaction via Touch ID. If the device is lost or stolen, users can use the Find My iPhone service to find the device and use Lost Mode to remotely lock the device with a four-digit passcode. All personal information, including the payment information will be locked to ensure the security and privacy of the user. [18]

To Apple users, the payment is a revolution in terms of the traditional payment method. There were more than 1 million credit cards registered on Apple Pay in the first 3 days of its availability.[19] The payment method is now gaining millions of new users each week in China.[20] In addition, since its launch, there were 220,000 vendors supporting Apple Pay. In the UK, Apple Pay has partnered with one of the largest contactless merchants, the Transport for London, which improves the adoption of Apple Pay in the country. In the meantime, many major banks has announced that they will support Apple Pay and provide convenient services for their customers. Some examples are:

  • In the United States, Apple Pay works with American Express, Visa, and many banks such as BAC, Capital One, Chase, Citibank, PNC and other hundreds of banks.
  • In Canada, banks includes TD, American Express, ATB Financial, Canadian Tire, RBC, BMO, CIBC, Scotiabank, Tangerine and President’s Choice supports Apple pay today.
  • In Australia, American Express cards and selected credit cards and debit cards from ANZ can be used through Apple Pay;
  • In Mainland China, major banks such as Bank of China, China Construction Bank and many other major card issuers supports Apple Pay today. There are 80% of Chinese credit and debit cards will work on the service from the get-go.
  • In Singapore, selected cards from American Express, DBS, OCBC, POSB and other banks are available for Apple Pay

Cooperation with Banks

According to the Financial Post, in the U.S., Apple Pay receives 15 cents from the supporting banks for every $100 purchased by the customers. However, U.S. bank interchange fee is one dollar for every $100 of transactions. Canadian banks were able to negotiate slightly more favourable terms than in the U.S., with a lower fee of four cents per $100 purchased and an annual payment of 50 cents.[21] The Financial Post reports that this is similar to the arrangements in Australia and the U.K.[22]

In-Store Purchase

Paying with Apple Pay is more secure than accepting traditional credit and debit cards. Every transaction on your customer’s iPhone or iPad requires Touch ID or a passcode. In addition, retailers do not receive the customer’s actual credit or debit card numbers, making it difficult for credit card information to be stolen. If the retailers accept Visa, MasterCard, American Express, Discover, or Interac contactless payments today, customers can pay with Apple Pay without any changes on the terminals. If the terminals do not accept contactless payments, merchants can contact their payment provider to verify the point of sale setup that can accept Apple Pay, and then ask them to enable it. In addition, Apple does not charge any additional fees to enable Apple Pay. However, similar to regular credit cards, the original transaction fees for using a credit card is still present for both customers and retailers. In the U.S., many POS systems require customer's signature to complete their transaction. Therefore, in order for Apple Pay to work in the U.S. without the need for a signature, retailers’ payment terminal must be capable and configured properly. In addition, the payment provider needs to support the latest network contactless specifications.

Customers may need to insert their card if the transaction amount is over 100 CAD in Canada, 20 EUR in France, 500 HKD in Hong Kong, 100 AUD in Australia, 40 CHF in Switzerland, 100 SGD in Singapore, or 30 GBP in the UK.[23] Below are some examples regarding the stores that support Apple Pay:

  • In U.S.: American Eagle, KOHL'S, Dunkin Donuts, BestBuy, Foot Locker, Jet Blue, LEGO, Macy's, McDonald's, Nike, etc.
  • In Canada: Aldo, Canadian Tire, London Drugs, Indigo, Mark's, Pizza Hut, Rona, Tim Hortons, etc.[24]

In-App Purchase

Users can pay within apps when they see the "Buy with Apple Pay" button or Apple Pay in the app as a payment method. To complete the purchase, users can simply follow the steps below:

  1. Tap the "Buy with Apple Pay" or Apple Pay button.
  2. Check the billing, shipping, and contact information to make sure that they are correct. Apple Pay will then store this information, so users will not need to enter it again. If users want to pay with a different card, tap > next to change their card.
  3. Authenticate with Touch ID. After the payment information is sent successfully, user will see “Done” and a checkmark on the screen.[25]

To use a rewards card with the in-app purchase, users first need to add their rewards card to the Wallet, and use the reward card first before the payment is completed. After using the rewards card, Apple Pay will switch to the default payment card to pay for the purchase. When it comes time to use Apple Pay on iPad for in-app purchases, users can just authorize their payments with Touch ID on their iPhone.

To accept Apple Pay within the app, merchants need to go to Apple Pay for developers to learn how to get started. [26] Merchants need to note that the payments made within the app is a cardless transaction. Using Apple Pay for in-app transactions might be treated more favourably than standard transactions with a credit or debit card. Liability for transactions might shift to the issuer. Merchants can contact their payment provider to learn how they can benefit from liability shift for Apple Pay payments within their app. Some example of retailers that support Apple Pay:

  • In U.S: Airbnb, Apple, Bestbuy, Disney, Target, Opentable, Groupon, Eventbrite, Starbucks, Sephora, etc. [27]
  • In Canada: Apple, Starbuck, Uber, Delta, Airline, Fancy, Kickstarter, etc.[28]

Website Purchase Using Apple Pay

According to the announcement at WWDC on June 13, 2016, Apple Pay is coming to the web this fall. Mac users will be able to pay online in Safari using the “Pay with Apple Pay” button. This will allow them to authenticate their purchases using a Touch ID on their phone or watch. This is then automatically processed in the browser. Retail partners will need to integrate Apple Pay into their checkout flow to allow their customers use this function. Companies such as Target, Expedia, United Airlines, and so on are currently using this service.[29]

This move also means that Apple is firmly setting its sights on PayPal, the current “king” of payments on the web. Since using Apple Pay may be even faster than checking out with PayPal, it’s likely most websites that currently use PayPal will offer Apple Pay as an additional payment option for customers. By bringing Apple Pay to the web, Apple is introducing their payment method to an entire new segment of shoppers – those that don’t shop in apps, or just prefer shopping on the web. However, there is limitation to these shoppers as the feature is only accessible on Mac computers. The new feature increases Apple’s customer’s switching costs and provides more options for users. However, it also creates barriers to adoption for users that do not have Apple Pay available to them. Apple Pay will also be available inside the new iMessage Apps SDK, meaning developers can add the ability for users to purchase things from within an iMessage conversation.[30]

Withdrawing Money from the Bank of America ATM

Through the cooperation with Bank of America (BAC), Apple Pay users are now able to access ATMs that have a cardless function, allowing them to withdraw cash from the machines using their Apple devices. To withdraw cash, users simply tap the devices on the NFC logo presented right beside the card slot on those ATMs. Users will then be prompted to key in the PIN before the screen displays all the available transaction options.

This feature hasn't been enabled for all cardless machines yet. Furthermore, users can only withdraw using the ATM with their BAC cards, other options such as transfer money, deposit or bill payment are not yet available for Apple Pay users. BAC’s cardless machines now also support Samsung Pay and Android Pay, which was announced in May.[31]

Expansion In Canada

Apple Pay now works with existing Elavon EMV-contactless point of sale terminals in Canada, transforming M-Payment into an easy, secure and private way to pay that is fast and convenient. Elavon is one of Canada’s largest processors and works with many major merchants. The company is also the top processor for airlines and in the top five for hospitality, healthcare, retail, education, and the public sector. As a result of Elavon’s influence, many more merchants in Canada will likely begin to support Apple Pay purchases running through major card networks.[32] The addition of the major card brands, along with the increasing consumer demand for contactless convenience, will continue to drive adoption of Apple Pay in Canada.

On May 10, 2016, Apple Pay expanded their services in Canada to customers of RBC, CIBC, ATB Financial and Canadian Tire Bank. The expansion includes varying support for Visa, MasterCard, and Interac, covering most major debit and credit cards in Canada. Apple Pay was previously only available in Canada for non-bank-issued American Express cards. Today, Apple Pay has completed the rollout across the Canada's Big Five financial institutions.[33] Apple Pay support is also coming soon to many Canadian businesses such as Air Canada, Aldo, Domino's, Pizza Pizza, Zulily, and the TTC transit system in Toronto. Additionally, the payment service is integrated into the iPhone and iPad applications for the Apple Store, Delta, Etsy, Fancy, Groupon, Kickstarter, Priceline, Starbucks, Ticketmaster, Uber, and Zara starting in June 2016. On July 11, 2016, Liquor Control Board of Ontario (LCBO) confirmed that it accepts Apple Pay at all of its over 850 stores in Ontario, Canada.[34]

Android Pay


Android Pay is a M-Payment developed by Google and is based on Google Wallet. The payment was released at Google I/O on September 11, 2015 and was first launched in the U.S. on September 11, 2015.[35] It supports 70% of Android phones, tablets and watches. Android Pay uses NFC technology on the existing terminals. Today, Android Pay is available in the UK, Singapore and Australia.

Android Pay offers similar functions as Samsung Pay and Apple Pay. It allows the users to make in-app and in-store purchase via simple a tap-to-pay process using NFC technology. The payment is secured by fingerprint on capable devices and PIN code on others. When users make payments to the merchant, instead of sending the credit or debit card number, Android Pay generates a virtual account number representing the user's account information.[36] This service keeps customer payment information private, sending a one-time security code instead of the card or user details. If the device is lost or stolen, users can use Android Device Manager to instantly lock their devices and secure it with a new password, or they can choose to erase all their personal information.[37]

Main banks has also begun to support this payment since its first launch:

  • In Australia, there are more than 50 banks supports Android Pay today. These bank includes Bank of Scotland, First Direct, Halifax, HSBC, Lloyds Bank, M&S Bank, MBNA and Nationwide Building Society. Natwest, RBS and Ulster Bank CEO stated they aim to be up and running with the service by September 2016. TSB and Santander will also participate in Q4 of 2016. Android Pay was launched in Singapore on 28 June 2016, and in Australia on 14 July 2016.
  • In UK, supported banks includes Bank of Scotland, first direct, Halifax, HSBC, Lloyds, M&S Bank, MBNA, Nationwide
  • In U.S., over 100 banks support Android Pay, including major card issuers such as AMEX, BAC, CITI, US bank and others.
  • In Singapore, supported banks includes DBS Bank, POSB, United Overseas Bank (UOB), OCBC Bank, Standard Chartered Bank. [38]

There are many stores that supports Android Pay such as the DisneyStore, Express, American Eagle, BabieRus, Lego, etc.

In-App support includes: AirBnB, SPRING, TURO, Newegg, Houzz, etc. [39]

Android Pay Day

To increase the adoption rate in the UK, Android Pay Day was announced by Google to help increase the number of users and user awareness. Through Android Pay Day, Android Pay users will receive discount offers from selected brands once a month (usually at the end of the month). The promotion began on June 21st, 2016, offering users two-for-one Frappucinos at Starbucks along with a £5 voucher that can be redeemed within the Deliveroo app. This creative promotion method is likely to continue to run in the future.[40]

Map Service and New features in updates – Find Stores Accept Android Pay

In a recent update of the Android Pay app, retailers that support Android Pay are to able show the NFC-equipped payment terminals nearby in an overhead map view. The new feature makes the accessibility of the payment visible to users, creating a new incentive for potential users to download the app.[41]

China M-Payment

No wallet?No Problem



Alipay is a third-party online payment platform launched by the Alibaba group. Its mobile app provides an easy, safe and secure method for millions of individuals and businesses to make and receive payments through the internet. In China, Alipay has the biggest market share of the M-commerce industry. This is due to two reasons. Firstly, it was previously famous for providing an escrow payment service, which reduces the transaction risk for online consumers purchasing in P2P sites such as eBay. Currently, there are over 400 million active unique users and it cooperates with over 200 financial partners, while supporting 14 currencies. Moreover, their financial service is also quite successful, as there is around 200 million users who purchase their financial products. As a result, Alipay also has the largest portion on sales from financial services through m-commerce.[1] Alipay uses QR code payment technology to support their payment service.

Functions of Alipay

In the Alipay app, most of the consumers’ needs can be easily satisfied since Alipay extends its payment services to plenty of offline scenarios, such as paying in restaurants, supermarket, convenient stores, taxis and public transports. Users can pay with Alipay at over 200,000 offline stores and over 500,000 taxis countrywide. At the same time, Alipay provides many in-app function such as Money Transfer, purchasing Air and Rail tickets, online shopping, and other payment utilities. For example, there is an in-app function called “takeout”.

To order takeout,

  1. Open Alipay mobile app and go to the “takeout” page where there are many categories for users ranging from dessert, vegetable and fruits, chain restaurants, convenient stores and so on
  2. Choose the category and then select the store/restaurant that the users wants to order from
  3. Choose the product and input the quantity
  4. Enter basic information including name, address, telephone number and so on
  5. Make payment
  6. Other in-app function is quite similar to this in the sense that every step is operated within the app and there is no need to redirect to other app, allowing it to be convenient and customized.

Cooperation with Wirecard

Alipay is currently cooperating with the German Company, Wirecard, to adapt a connected POS technology.[2] From Alipay’s side, this partnership allows them to expand into Europe’s m-commerce market. In addition, they will obtain advanced technology to improve the security of Alipay’s system. For the retailers in Germany, the Chinese tourism market is growing constantly in Europe and offers enormous revenue opportunities. With the Wirecard’s solution for Alipay, merchants can attract wealthy new customers from China by accepting the Alipay app at their point of sales. Currently, in Germany, the M-Payment trend is still in its infancy. Alipay can take advantage of this point to expand into the German market. However, there is another popular M-Payment platform called Paybox, which could potentially be a competitor of Alipay.

Alipay launched “Electronic ID card”

The Electronic ID Card is co-developed by the Public Security Bureau of Wuhan and Alipay. After nearly a week of operation, over 30,000 citizens have applied for this ID.

Currently, with this virtual card, citizens can handle 148 items related to public affairs through the online police station, including online application for identity documents and travel documents such as passports. In addition, after the completion of the scan code system, the card can be used for checking into hotels, entering stadiums, museums and theaters, and passing security checks in train stations and airports.

The electronic ID card is a creative way to improve the working efficiency of the Public Security Bureau and provide a convenient service to citizens. With this card, Wuhan citizens can save time and transport costs. Moreover, the technical department at the Public Security Bureau has taken extra security measures to ensure that personal information is secure. [3]

WeChat Pay


Wechat Pay is a payment feature integrated into the WeChat app launched by Tencent QQ and is the second largest m-commerce platform in China. The main payment technology used is QR codes. Wechat has remained in first place as a leading social media platform in China for three years. In other words, WeChat alone can reach a majority of all digital buyers in China, especially those on mobile since WeChat is a mobile platform.

Leading social media sites/apps in China


Wechat pay became famous for its ability to give “lucky money”, which is a traditional Chinese custom. This is a monetary gift given during the spring festival by older relatives. For example, usually parents would give their children lucky money hoping that their children will have a happy year!

Partner with Hotto Link

Tencent is partnering with the Japanese social data provider Hotto Link to roll out their WeChat Pay servicez to 10,000 stores in Japan by the end of the 2016.

The project’s target is Chinese travellers, who account for a quarter of all visitors to Japan and generally spend a lot more than other tourist groups. In addition, there are also many Japanese products such as skincare, makeup, food which are very popular in China. As a result, the M-Payment service will allow Japanese businesses to promote their products and services and offer discounts via Hotto Link’s page on WeChat.[4]

Comparison of M-Payment in China and North America

M-Commerce In China

M-commerce retail comparison in China, the UK, the US and Korea

China's retail m-commerce sales was 3.7 times that of the US in 2015 and is growing rapidly at 40%+ annually. As seen in the graph, China’s retail m-commerce (excluding travel and event tickets) is larger than those of the US, UK and Korea combined and continues to grow rapidly.

According to eMarketer, in 2015, China mobile e-commerce was about 50% of the total retail e-commerce sales and about 8% of total retail sales. [5]

Smartphone Type

China: Alipay and Wechat are two of the most popular mobile apps that Chinese users adopt in daily life, both of which utilizes QR code payments. QR Codes are are on almost any smartphone. Therefore, most smartphone users in China can use this M-Payment method as they only need to download the app.

North America: M-Payment method is limited by smartphone type, as most of the M-Payments rely on NFC and MST . For example, Apply Pay only applies on iPhone 6 and later.

Business Size

China: There is a wide range of business sizes that can adopt M-Payment, from an international business to a small business or even family businesses like street vendors.

North America: Usually the business sizes that can utilize M-Payment is limited to medium to large companies, such as chain stores or restaurants.

Retailers Benefit

China: Providers of third-party e-payment services offers subsidies to merchants who use their app in order to maintain their user bases and market shares.

North America: Mobile payment makes no difference to retailers-it is the same as using a regular credit /debit card and M-Payment in North America mainly exist as a form of an in-app web-based application.

In-App Function

Payment Methods

China: Mobile apps provide convenient and powerful functions for users to satisfy their daily needs, while also supporting multiple payment method such as QR Code Payment, Quick Pay, In-App Web-Based and Native In-App Payment. Therefore, M-Payment in China provides a series of in-app functions, which allow users have a “one stop” shopping experience.

North America: M-Payment is mostly used as payment method in North America. As a result, they only provide quick pay and in-app payment methods on merchant’s app. For example, when users are making a purchase on the Target app, they would be redirected to Apple Pay in order to pay for it.

Cost of Installation

QR codes cost only as much as printing out the code and therefore, do not cost much for the retailer. NFC tags, in comparison, cost the retailers much more than the former. Setting up the NFC equipment also requires the company to invest additional finances. Hence, QR codes are the cheapest and the best option for companies that cannot afford too much extra expenditure.


QR codes do not offer secure encryption. NFC tags, on the other hand, come with a fixed manufacturer ID. They could also include encryption to hide the programmed data that they contain.

Other reasons why third party M-Payment is so successful in China

Firstly, in China there are costly transaction fees for both users and merchants using traditional banking services. For example, consumers will be charged, if a cardholder withdraws cash in a city different from the city where they opened an account. Secondly, although there are many policies to control and manage the third party M-Payment market as a whole, the government supports this kind of business. Moreover, the processes for traditional banking services in China are complicated for users. For users who want to make transactions online, they need to go to a bank branch to open the online service first, and they will be given an account protector which strengthens the security of the account to prevent credit card fraud. Lastly, users have to follow the bank's instructions step by step to finish the transaction, which is a very complex process.

This graph is shows the mobile data consumption in China as of January 2015. Mobile data consumption on Wechat remains in first place due to being the most popular mobile communication app in China. However, shopping only takes up 4.8%, which is quite low. In addition, M-Payment is usually a short transaction which users do not need to stay online all the time, hence it does not consume much data.

Comparison of M-Payment between China and North America

Lack of Adoption in Canada

In Canada, adoption of M-Payments has been slow, with only about 40% of all Canadians knowing about the existence of M-Payments. Within this group, only about 10% use smartphones to make payments.[6] There are several reasons for the lack of adoption including: privacy, security, lack of incentives, poor usability, and complexity of M-Payment.


The main reason that many users are hesitant to use M-Payments is due to security concerns. All M-Payment methods have a different security measure. With each different security measure, there are different ways for criminals to get access to user’s personal information.

Security Methods

Tokenization is a security method that protects user’s sensitive card information by replacing it with a random number that is unique for each transaction. This is a called a digital token. This means that no customer data is stored on the device. As the number is unique to each transaction, it would be useless to hackers intercepting the transaction.[7] Tokenization is the most popular method of security, used by payment methods such as Apple Pay, Samsung Pay and Google Wallet. However, an issue with Google Wallet is that most of the user’s transaction data is stored on the cloud, making it vulnerable to hackers.

How tokenization works with m-payments[7]

Trusted Execution Environment (TEE) is a security measure that was created for Android phones. This is a secure area in the device that ensures that the sensitive data stored in the phone is protected and processed in a secure environment. [8]

Device Specific Cryptograms protect the user’s payment information and transaction by ensuring that the payment originated from the cardholder’s device. Similar to tokenization, this results in any stolen data unusable and cannot be used by hackers.”

Two Factor Authentication is used by almost all payment methods along other security measures. This provides another layer of security against fraud by requiring two independent mechanisms for authentication. Common authentication methods are something that the users know (like a password), something that the user has (such as a credit card or phone), and a biometric (such as a fingerprint). [9]

Potential Security Issues

The top four security vulnerabilities that cybersecurity experts identified in a ISACA survey[10]

In a survey done on over 900 cybersecurity experts, ISACA identified 4 main vulnerabilities with M-Payment:

  1. Using public wi-fi: most public wi-fi hotspots are unencrypted, hackers can intercept payment information while it is being processed over the Wi-Fi.
  2. Losing or getting your device stolen: if M-Payment was to become more prevalent, there will be an increased incentive to steal other people’s phones. Stolen or lost devices can give thieves the ability to use the owner’s credit cards, if the payment method isn’t secure.
  3. Phishing: for payments that use QR codes, the code that is provided by the location can send you to a malicious website which is infected by a virus.
  4. Weak passwords: some payment methods do not have a two factor authentication system and is only protected by the phone’s password. If the password is weak, then hackers can easily access the user's’ payment information.[10]

Experiment: Stealing Money With Apple Pay

Security issues can also stem from the banks that are connected to the M-Payment method. The amount of security measures that are taken to authenticate the cardholder depends on the bank. Some authentication methods include:

  • Requiring authentication or security questions.
  • Using an email/phone call to confirm.
  • Requiring the card number CVV and the expiry date of the card.

In an experiment done by at Pindrop, a phone security and fraud prevention company, researchers found that adding stolen credit cards to Apple Pay is quite easy. Apple and their partner banks do not have much security measures for preventing stolen credit card information from being used in Apple Pay. Users can quite easily add stolen credit cards onto their Apple Pay accounts without needing much confirmation from the banks.[11]

There were three main confirmation issues that the researcher needed to get around to add a “stolen” card onto Apple Pay:

  • Security questions: By doing a quick google search on the original card owner, the researcher was able to answer most security questions asked by the bank.
  • Verification code: By calling the bank, fraudsters can change their email and phone number before they add the card, allowing them to receive the confirmation text/email.
  • Different names on card and Apple Pay account: A simple name change on the iTunes account will allow the card to be added.[11]

M-Payment: More or Less Security?

When a person loses their wallet, there are three things that can potentially get stolen; credit/debit cards, cash and their identity. With M-Payment, these risks change quite drastically. With M-Payment, the only potential loss is the credit and debit card information. In addition, most payment methods and digital wallets use a two-factor authentication system, this means that even if a person was to get into the lost or stolen phone’s lock screen, they will still need to get past another layer of security. By having this extra layer of security, M-Payment is slightly more secure than a regular NFC-enabled credit card and cash.

However, a security issue that M-Payment do have that is different than the traditional wallet is cybercrime, such as hacking. This can be seen in Sweden with the increase in prevalence of M-Payment. The amount of electronic fraud in Sweden more than doubling over the past decade.[12]


With most applications, privacy is already a concern for many individuals. Most mobile phones can already track the user’s location. By using M-Payment, the user’s phone can also keep track of their transaction information, such as where they made a transaction. Some of the concerns that users have about privacy including: lack of knowledge of what information was being collected, how it was being used and the feeling of being “spied on”.[13]

Little to No Incentive to Change

One of the main incentives to use M-Payment is the added convenience of the payment. However, many users find that using their phone to pay is not much simpler than taking out their wallet. Using M-Payment still have many steps, for example, to make a payment, users will need to:

  1. Take out their phone,
  2. Unlock the phone,
  3. Find their mobile wallet or payment app,
  4. Initiate payment through the phone,
  5. Pay and wait for the transaction to go through.

Poor Usability

As M-Payment is still in their early stages, the usability is still quite low, especially when compared to credit and debit cards.

Currently, M-Payment is not widely accepted by many stores. There are two main reasons for this:

  1. Technology Constraints: there are many different choices of M-Payment to choose from. Retailers will need to study their customers carefully to determine the best M-Payment option to implement.
  2. Partnership Constraints: for example, Apple Pay will only work on stores that are partnered with Apple. Even when a store has a NFC reader, Apple Pay may not work.

In addition to the above factors, another issue that many users face is that M-Payment does not have a global standard. A payment method that works in China, such as WeChat Pay or AliPay does not work in North America.

Another hindrance to the usability of M-Payment is the payment method’s need for Internet connection while the payment is being made. This means that in store, users will need to either use their own data, which not every user will have, or connect to the public wi-fi. In addition to the potential security issues, public wi-fi can be relatively unreliable, which can lead to payments taking longer or simply not working at all.

Future Consideration

Becoming a Cashless Society

If M-Payments were to become more mainstream, a major outcome is moving society towards a more cashless one. All over the world, the amount of cash being used in everyday purchases are falling. In Canada, the amount of cash used in transactions have continued to fall, making up only 44% of all transactions in 2013.[14] In a study done by the Bank of Canada, many factors affect the amount of cash used by individuals, some examples of this is:

  • Age: The amount of cash used for purchases decreased with age. Younger Canadians tend to use less cash than older ones.
  • Income: Canadians with lower incomes make more purchases using cash.
  • Education: People with higher education will spend less cash than those who only finished high school.
The different payment methods used in Canada, based on volume used[14]
The amount of cash used by each group based on income level and education[14]

One of the main reasons for this is that those with higher incomes, university educated, or people between the ages of 18 to 34 are more likely to use payment innovations.

Cashless in Sweden

Sweden is currently one of the best examples of a country that is moving toward becoming a cashless society. According to the Swedish central bank, Riksbank, cash only made up about 2% of all of the payments made in Sweden last year.[12] Many Swedish businesses do not support cash transaction, making the use of cash difficult:

  • Most transit systems do not accept cash, such as the Stockholm Metro or the Swedish bus system
  • Retailers can legally refuse to accept cash
  • Street vendors and even churches prefer card of M-Payment to cash
  • The homeless carry credit card readers provided by a charity. [15]

Swedish banks have also begun to support the cashless trend with 900 out of the 1600 commercial bank branches no longer keep cash on site or take cash deposits. In addition, many rural areas no longer have ATMs.[12]

Another reason for this move towards becoming cashless is that M-Payment. In Sweden, the amount of mobile phones and internet hotspots available is one of the highest in the world. This makes the adoption of new electronic payments much easier, as these payments simply require a mobile phone and stable Internet connection. In addition, Niklas Arvidsson, a professor at the Stockholm’s Royal Institute of technology states,

“Consumers are also fairly receptive towards digital services, which makes it easier to test these services in Sweden."[16]

In other word, Swedish consumers’ willingness to try out new technology is very high, so services such as M-Payment is more easily adopted by consumers. He also points out the the success of the M-Payment application, Swish as being another important factor for this success of M-Payment. This application uses the user’s mobile phone numbers to allow real-time account to account payments. This works for both P2P and B2C transactions.[16]

Implications of a Cashless Society

Implications of a Cashless Society[17]

There are many implications of becoming cashless, for both the government and society itself:

  1. The government will be able to keep track of almost any transaction that is made. This will allow the government to collect more taxes through these transactions, effectively removing the ability to evade taxes. This mainly affect those in the trades such as plumbers, painters, electricians and so on, as these people generally prefer to be paid in cash to avoid paying income tax.
  2. A decrease in the amount of illegal activities. The black market is funded mostly through cash, as it is untraceable. If society was to more towards a more cashless one, activities such as the purchasing of drugs or prostitution will be greatly hindered. [18]
  3. A potential for personal debt held by individuals to increase. The amount of credit card debt held by individuals is on the rise. When cash becomes less tangible, people do not see the immediate consequences of overspending. When people are faced with something tangible that can be lost, they become risk averse and more conservative with their spending.[19] In addition, cash is often used as a method for managing debt and spending, as it is easy to see how much is being spent.
  4. Unbanked or lower income individuals will be negatively affected by the removal of cash. If an individual does not have access to a bank, they will not be able to make any transactions in a cashless society.[15] This can result in low income families or individuals more dependent on government support.
  5. Paper money costs essentially nothing to hold for individuals and bears not actual risk (other than physical theft). Holding money in the bank may have fees and some counties (such as Sweden) may have negative interest rates.[18] This can result in a loss for individuals by keeping money in the bank.
  6. Money supply is an important factor that the government uses to control the economy.[18] Without cash, the government and the Bank of Canada will need to find other ways to influence factors such as interest rate and growth in the Canadian Economy.
  7. Using Sweden as an example, it can be seen that the decrease in cash use, along with the increase in use of M-Payment, has resulted in two changes. This is a decrease in the amount of bank robberies occurring and electronic fraud more than doubling.[12]

Personal Opinions

Currently, M-Payments in North America are still in their early stages of development, with only the innovators actually using this payment method. We believe that it is likely to stay this way, unless M-Payment developers improve the seamlessness of their current products. We can see that using M-Payments is about the same as using your wallet, so unless you actually forget your wallet, it is not that much more convenient. In addition, we think that the reason M-Payment is so far behind in North America, especially when you compare to China, is due to the many substitutes that are available in North America. China, until relatively recently with the introduction of Apple Pay, had two main M-Payment methods, WeChat Pay and Alipay. Both of these systems uses a QR code to make payments. Along with being relatively cheap and easy to set up, the standardized nature of the payments makes it extremely easy for both businesses and customers to use. North America on the other hand has many different ways to pay, such as NFC, QR codes, MST, etc. This means that not only do retailers need to choose which technology to invest in, but customers also need to choose which to use.

If M-Payment was to become more widespread, along with the already ubiquitous nature of card payment, we can potentially move towards a cashless society. However, we believe that a fully cashless society is extremely unlikely. There are many people who still prefer to use cash over card. In addition, many people do not have a bank account or even access to a credit card, such as the homeless, lower income individuals, and so on. We don’t believe that the government would fully eliminate cash, especially if it would affect so many different individuals. As seen in the analysis above, the elimination of cash can affect many different individuals. For example, in Sweden, a charity has begun to provide the homeless with credit card readers, which will allow them to receive money through credit cards. However, many people (including myself), would likely be extremely wary of handing a homeless person, or anyone that they are not familiar with, their credit card.


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