Mobile Payments Are On The Rise In Australia: Here's What You Need To Know

Why bother pounding the streets if it’s quicker and cheaper to shop online from home?

The answer, say architects Warren and Mahoney – a firm specialising in innovative retail spaces – comes down to human interaction.

“We see this in restaurants and cafes,” says Warren and Mahoney director Andrew Barclay.

“Now you can order in a vast number of meal options – from gourmet meals to takeaways – to be delivered to your home but there is still a driver to go out to the restaurant and engage with other people.”

Warren and Mahoney says it’s seeing retailers reconfiguring physical environments to match what’s happening online.

So the digital shopping revolution hasn’t changed the urge to experience physical retailing and the joy of talking with other people. Where the revolution is taking place is in how much easier it is to pay for what you want.

Expect the use of cash and cheques to decline and the use of mobile payments to grow.

Mobile technology provides mechanisms which reduce the need to carry plastic, debit or credit cards. All you need is a phone.

According to technology analysts Gartner, the total worldwide value of transactions using mobile technology is expected to grow from $35 billion in 2012 to $173 billion in 2017, a compound annual growth rate of 31%.

This projection doesn’t even include purchases made via online websites accessed through a mobile phone browser, or in-app purchases. It’s purely about paying for stuff with your mobile device.

Gartner analyst Christophe Uzureau says there’s a push for Near Field Communication (NFC), which enables payment by just waving or tapping a phone at the store’s Point of Sale system near the counter.

“And contactless cards are getting more and more popular,” he says.

These cards compete with mobile payments but he says the most important work was being done in Point of Sale where merchants can be paid by mobile device.

The opportunity is that this is a lower cost way for small to medium business to set up accepting card payments than to buy a full system.

“It levels the playing field to a certain extent,” says Uzureau. “It gives a point of entry to start taking payments at a lower cost.”

The best way to look at mobile payments was from a customer point of view. Does it work for them?

Gartner says there are four sets of capabilities:

  • digital wallet solutions to store details of credit cards or accounts;
  • new payment experiences;
  • offers, coupons and loyalty programs, and
  • real-time personal financial management.

Let’s focus on the digital wallet, a way of storing payment card information on the phone or in the cloud, and making the purchase at the point of sale through the phone.

Encrypted payment information is exchanged between the merchant’s terminal and the mobile phone in a variety of ways, including:

Contactless payments: NFC (Near Field Communication)-enabled phones can be waved or tapped at the point of purchase. No PIN, no signature.

Quick response code (QR code): The QR code can be provided on a merchant’s bill, which the customer can scan and pay from the phone or a phone might show a QR code which contains payment information, which can be scanned by a reader at the merchant to accept payments.

Bluetooth Low Energy (LE)-based payment: This mechanism uses the ability to identify the location of a phone and, hence, a person, within a certain range. The customer is able to acknowledge on the phone (or verbally) to complete the payment.

Ultrasound-based payment: The phones and the payment devices will use ultrasound — sound at a higher frequency than what can be heard by the human ear — as the basis of exchanging payment information.

Different mobile devices have varying capabilities for these kinds of payments, but they’re increasingly likely to be standard in phones rolling out from this year.

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