What is a Mobile Payment?

A mobile payment uses your mobile phone or other mobile device, online or in person, to provide information electronically to make a payment. There are many different technologies and processes used to make mobile payments and new ones are always around the corner.

Common Types of Mobile Payments

Person-to-person or “P2P” payment apps. P2P payments allow you to send money to someone else without writing a check or swiping a card. Common providers include Zelle, Venmo, PayPal, and Cash App. Depending on the provider, you can initiate P2P transactions from your online bank account portal, prepaid account portal, or mobile application. While these apps may be a quick and easy way to send and receive money, don’t sacrifice safety for convenience. Learn more about P2P payments and how to protect yourself from frauds and scams when using these apps.

Near Field Communication (NFC) mobile wallet payment. NFC enables you to tap or wave your mobile device close to a “reader” next to a cash register or on a vending machine, turnstile, parking meter, etc. Your mobile device sends the account information that you are going to use for the payment through a radio signal with a short range of about four inches. The mobile wallet app stores your account number in a secure chip in the phone or in a secure file server linked to the mobile wallet app. Examples include Apple Pay and Google Android Pay.

Mobile web payments. Use the web browser on your mobile device or a mobile app to make a purchase on the Internet and charge it to your credit, debit, prepaid or bank account.

QR code (quick response) scans. Your mobile device produces a QR code on the screen to be scanned at the register. The QR code provides the link to the payment information. Usually you download a mobile app for the merchant (such as Starbucks) or a mobile wallet (such as LevelUp) that allows you to create the QR code on your mobile device.

Mobile text payments. Send a code by text message to the seller using your mobile device to approve the payment. The purchase is charged to your wireless service bill or a pre-paid account held by the mobile operator. Personal information, such as payment account number, should not be sent via short message service (SMS).

Direct mobile billing. Provide your mobile phone number as your account number to the merchant. The purchase is charged to your wireless service bill.  These are normally low-dollar digital payments for items such as ring tones, screen savers, or apps, with most mobile operators establishing a transaction and consolidated dollar limit.

Protecting Your Privacy and Security When You Make Mobile Payments

Did you know that now you can use a smartphone, tablet or other mobile devices to pay for some purchases? Mobile payments can be convenient – no need to write a check or to pull out your wallet for cash or plastic. No need to type in your payment information to buy something online. But are mobile payments safe? What about your privacy? Those are good questions to ask when you consider using any new technology. Because you usually carry your phone or other mobile device with you, it’s on most of the time, and it may contain very sensitive personal information, it’s especially important to keep it, and its contents, safe and secure, especially if you want to use it to make mobile payments or conduct other financial business.

Learn more from the Consumer Federation of America on mobile payments, such as:

Privacy and Mobile Payments

  • Payment Apps
  • What Information Can An App Get?
  • Check the Privacy Policy
  • Know Your Privacy Rights
  • Tips for Protecting Your Mobile Payment Privacy

Security and Mobile Payments

  • Lock Your Device
  • Beware of Malware
  • Use Public Wi-Fi Carefully
  • Security Features Built Into the Payment Process
  • Tips for Keeping Your Mobile Payment Secure

What Should You Do if Something Goes Wrong with a Mobile Payment?

  • First Steps to Resolve a Problem
  • Payment Dispute Rights
  • Tips for Solving Mobile Payment Problems

What is a Mobile Wallet?

A mobile wallet stores payment card information on your mobile device or smartwatch and allows you to make electronic purchases.

Mobile Wallet Security. Purchases made using a mobile wallet may be more secure than physical cards. This is because mobile wallets use methods such as data encryption and tokenization to monitor and secure your personal and payment card account information.

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