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Mobile Commerce: Paying for stuff with your mobile phone

grand master

Google Wallet.jpgThe mobile phone is now an integral part of our everyday lives and fulfils a whole variety of functions including e-mail, music, photography, social networking, exercise and heart rate monitoring – it can even replace pen and paper. Having everything integrated into one always-connected device means that we no longer need to carry round an entire backpack of gadgets: we can do it all with just one simple portable device.


With the trend towards multiple functions converging into the mobile phone, it’s only a matter of time before our wallets, debit cards and loyalty cards also become integrated into our mobile phone.


Over the last months, we’ve covered NFC mobile payments and a range of mobile applications which can help with your Christmas shopping and price comparison. In this article, we’ll look at the state of mobile commerce: the apps which currently allow you to pay with your mobile phone. We’ll also look east to see what high-tech restaurants in Japan are doing and we’ll see how NFC could revolutionise mobile payments and allow your smartphone to replace your wallet.


Paying with your mobile phone today: Barcodes, SMS & Pizza


Starbucks.jpgAs of January 2012, the main ways of paying with your mobile phone in the UK are either through smartphone applications or through premium rate text messages.


The first method of paying through a smartphone application is offered by companies such as the coffee chain Starbucks and the restaurant Pizza Express.


Starbucks currently allows you to pay for coffee through their iPhone application. The application works on a similar basis to a Pay As You Go mobile or an Oyster card with a pre-paid “account balance” which needs to be topped up from a debit card or credit card. When it comes to paying for your coffee in-store, the application displays a QR Code barcode on the phone’s display. This barcode is scanned in-store and when used, deducts the cost of the coffee from your account balance. The Starbucks application does not require a NFC-enabled phone as it uses barcode technology rather than NFC technology. Barcode technology is also used by loyalty card applications such as Tesco Clubcard and Subway’s Subcard.


Pizza Express.jpgPizza Express offers an iPhone application which allows you to pay for your pizza electronically through your smartphone. Instead of settling your bill using cash or a credit card, the application allows you to pay for your meal using PayPal. Once you’ve finished your meal, you’ll need to enter the 12 digit code from the bottom of your receipt into the application. The application handles the payment through PayPal with an electronic confirmation of the payment being sent automatically to the restaurant tills.


The second method of paying using your mobile phone is through a premium rate text message where the cost is added onto your mobile phone bill. This has been a popular way of paying for ringtones, applications and for donating to charity. Fundraising services such as JustGiving allow fundraisers to set up their own SMS shortcode from which they can collect charitable donations towards their chosen causes.


Paying with your mobile phone tomorrow: Sushi & NFC


The trend towards paying for things using our mobile phones is only set to continue in 2012 with the ability to order direct from your phone. Meanwhile, NFC technology promises a quantum leap in the speed and convenience of paying for things with your phone.


Sushi.jpgWe’ve already discussed applications which allow you to pay for coffee or pizza using your smartphone. It doesn’t take a huge leap of imagination to see how these applications could be adapted in the future to take orders too. In Japan, it is common for sushi train restaurants to take orders electronically through a touchscreen with a complex conveyor belt system being used to deliver food direct to the table. Such a system could be adapted to work on a smartphone and would allow you to place orders for food in a restaurant or drinks in a bar using your smartphone. The bill would then be charged automatically to your card or PayPal account in the same application.


In terms of paying with your phone in grocery stores and on the high street, Near Field Communication (NFC) is a promising technology because it’s fast, secure and convenient. NFC on your phone would work in the same way as London’s Oyster Card does today: simply tap your NFC-enabled phone on a reader to pay for your goods, to redeem relevant vouchers and to collect loyalty card points.


Google Wallet.jpgNFC potentially offers huge time savings compared to the current method of paying for goods: passing through the supermarket checkout currently involves the cumbersome process of searching through your wallet to find your credit card, the relevant store card and any relevant vouchers you wish to use. Each card needs to be handed over individually to be read or processed. Today’s basic barcode-based and app-based mobile payment technologies make things slightly better - however the process is still cumbersome as it’s necessary to load up the relevant apps. With NFC technology, the entire process would be automatic, transparent and would take only a fraction of second.


In the UK, there are currently very few phones with built-in NFC functionality. The Samsung Galaxy Nexus is one notable exception with Google offering the “Google Wallet” payment system to US-based owners of the phone (unfortunately Google Wallet isn’t available in the UK). The number of NFC-enabled devices is likely to increase in the coming years with Visa having recently certified phones such as the Samsung Galaxy S II, BlackBerry Bold 9900 and LG Optimus NET NFC for use with their "PayWave" technology. Stores such as McDonalds and Subway are also now accepting NFC-based contactless payments.


The benefits of mobile payments & a mobile wallet


There are several key benefits to being able to pay using your mobile phone:


  • Face Unlock.jpgMore secure. Paying through NFC is more secure. Unlike a traditional wallet, a mobile phone can be secured with additional measures such as a PIN code (or facial recognition with Android 4.0). During the payment itself, transactions above £15 are still secured in the same way as “Chip and PIN” transactions would be. In the event you lose your smartphone, it can be remotely tracked, locked or wiped using software such as Apple’s “Find my iPhone” or Lookout Mobile Security for Android. It is also possible to transfer your electronic wallet to another phone. In contrast, losing your physical wallet causes much more problems as it cannot be tracked and each credit and store card must be cancelled individually.
  • Faster. There is no need to fumble around in the supermarket checkout to find the relevant credit card, loyalty card and vouchers from around your wallet – during a NFC payment, your phone can pick out all of the relevant cards and vouchers automatically.
  • More capacity. Whilst a physical wallet can only hold a limited number of cards, there is essentially no limit to the number of cards you could hold on your phone.
  • No more receipts. Moving to an electronic wallet means we can dispose of paper receipts. Not only is this greener, it would be possible for smartphone apps to keep track of your spending and automatically collate VAT/expense claim forms.

The obvious downside of a mobile wallet and paying with your mobile phone is that when you run out of battery, you’ll lose access to your electronic wallet too. With today’s smartphones sometimes faltering before the day is out, this could be a significant problem for early adopters of the electronic wallet and mobile commerce.


Your thoughts…


In this article, we’ve covered today’s barcode-based payment technologies, application-based payment technologies and SMS based payment technologies. The next few years are likely to see the introduction of NFC technology which could transform the world of mobile-based payments and commerce.


Do you think you’d like to pay for things using your mobile phone or do you prefer paying with cash? Do you think mobile payments will take off or are battery-life and privacy worries too much of an issue for you? Are you looking for NFC technology to be inside your next mobile phone?


Ken Lo writes about mobile technology and the mobile industry at Ken's Tech Tips.

Nice article. Wish there where more apps for Android tho, iPhone gets everything =\

like the idea,..but would not like to lose my phone,probably worse than losing your purse or wallet

id love to be able to pay for apps using mobile credit on the android market. it would be so much easier than using a credit card. something to consider maybe?
Loving the post. I'd definitely use NFC to pay for things. It'd be so much more convenient than scrambling for credit cards etc, as the post said. Whilst I'm sure there are ways people would be able to hack into it, there are ways for people to hack into everything - we just assume that it is made sufficently difficult that people won't want to put in the effort. Let's hope it's the same with this. =P The Wordsmith
amazing post..very interesting read Smiley Happy
One thing I know is possible, but I don't know if it's implemented for security: you could use your phone to put your PIN number in so it's more secure as the current machines can be hijacked.


grand master

@headbangerkenny That's a fascinating idea, I really like it. Some companies are beginning to implement two-factor authentication for some of their products e.g. for Gmail you can set it up so every time you log on, you need to enter a verification code received via SMS. The great thing about this is if anyone ever guesses your e-mail password, they still can't access your account unless they have possession of your mobile phone.


Something which is interesting to explore would be a way of using your mobile phone for two-factor authentication with credit card payments. For example security when shopping online would be much more secure if you could enter a SMS verification code rather than the 3-digit CVC card on the back of your card (which anyone can write down when they handle your card). The same thing could be done for transactions which do not match your normal spending patterns.



I like the idea of paying by mobile, its quick and easy. I don't see the advantage over a contactless credit card though, that is just as easy in my opinion. Also, I hate the idea of having to top up into your mobile wallet, as O2 have mooted. That just caused extra unwarranted hassle

Splendid post!


I for one am looking forward to the arrival of Google Wallet and other such products!