How to choose a mobile payment system for your app
The rise of mobile devices and their penetration into our daily lives through shopping, traveling or business services is bringing a significant change into the spending habits of users. Popularity of mobile devices and shifting away from cash payments has created need for direct, real-time payments that can be made through smartphones with little effort.
The latest surveys show a substantial decline in the use of cash among American consumers. Up to 59% of people in the U.S. tend to carry less than $20 in cash in their pockets. The participants of the study also noted that they are not readily using their smartphones yet if they don't trust the payment system. At the same time, it is estimated that by 2019, payments made through mobile devices will reach $142 billion in the U.S. only, with remote payments constituting an absolute major portion of all mobile transactions.
These facts and projected statistics present an opportunity if your mobile app includes payment opportunities. You need to be sure that the payment system you select fits your app's functionality, runs smoothly and clearly answers the user needs. The Onix team has expertise in the integration of payment systems into apps.
What types of mobile payment systems are currently in use
To able to collect payments through mobile devices, merchants and payment card processors need to meet PCI compliance standards and secure a user's financial information. Obtaining PCI certification for accepting mobile payments for your payment system can be complicated and time-consuming. Instead, integrating one of the existing PCI certified payment options into your application is the most efficient way to proceed.
Here are the types of mobile payment systems:
- Mobile as point-of-sale (VeriFone, Square)
These payment systems are most effective for in-person sales (e.g., stores, restaurants, marketplaces). A user's smartphone becomes a cash register and there is no need to install a mobile payment system for a consumer.
- credit card model
- good for small businesses that have no cash register
- convenient as some systems unite payment and service fees (bank and processor) into one fee
- often higher transaction fees compared to other systems
- not suitable for businesses with large revenue due to the system’s fraud detection mechanism
- threat of a credit card or identity theft
- Mobile at the point-of-sale (Apple Pay, Visa, Google Wallet, Isis, MasterCard)
These systems are known as mobile wallets. Payments are conducted based on NFC (contactless and instant data exchange between devices) or "tap and go" technology.
- NFC technology is available on most smartphones
- contactless payment systems, so a user is better protected compared to card swiping
- credit card data is saved into the system
- sensitive data from illegal internal use by the system’s company owner
- possibly slow traction due to cooperation issues between credit card service providers, phone manufacturers and merchants
- Mobile payment platform (PayPal Here, Serve, Dwolla, Stripe, Braintree)
Unlike the first two groups, platform systems are based on WAP technology (the smartphone connects to an online payment system to pay or requests card data via a website).
- credit card data is security encoded
- no need to carry a credit card with you
- substitute to SMS paying
- bank and card service fees are required
- possible cyber-attacks on the system
- Direct carrier billing (Angry Birds, Payment One, Boku, MoPay)
Fees in these systems are tied to phone bills either through SMS or in-app billing.
- no need to have the newest smartphone model to make purchases
- easy to use (no need to create username or password)
- secure (no credit card or personal details required)
- only one bill that is tied to a mobile service provider
- system use is limited to buying digital content (e-commerce)
- higher fees for SMS
- SMS is sometimes slow or does not reach a user’s phone
- Closed loop mobile payments (Starbucks)
These systems offer their own personalized payment platforms that are built by companies and operate as store credit cards. A user downloads the application, puts money on the card to pay for their future purchases and receives a full scope of store services (tracking of coupons, gift cards, loyalty rewarding).
- save space in a wallet while keeping track of store special offers
- high level of safety (card data is not transferred to the merchant)
- this payment model does not work for all business models
- you need to put money into the card which may be inconvenient for some users
- high competition for other payment systems
How Onix implements mobile payment systems in app development
One of the latest projects that our iOS team has delivered is an app through which users can subscribe to watch live Mongol TV on their iOS devices on a monthly basis. As part of the project, the team integrated a payment system into the app to enable a subscription plan.
For Mongol TV app, we had three possible options to choose from: PayPal Here, Authorize.Net and Stripe:
- PayPal requires 2.9% + $0.30 as a transaction fee, but offers volume discounts and does not require monthly fees (except for an advanced account option). The system offers in-person payments (swipe system) and debit card account payments.
- Stripe requires 2.9% + $0.30 as a flat transaction fee, but might enable volume discounts.
- Authorize.Net charges $0.10 per transaction, but requires a high setup fee ($99) and a gateway fee of $20, but offers a good variety of payment portals (online, telephone, mobile, retail).
In the case of Mongol TV app, our choice was made in favor of Stripe, because the system does not require setup, monthly service, refund or card storage fees.
1. The payment system should be easily used. It is essential to check how quickly a user can complete the payment process.
Stripe is a developer-friendly tool that provides a rich API library in a number of languages (e.g., Ruby, Python, Java, PHP) and ensures smooth and effortless integration into the application. Also, for users, the system offers well-designed checkout forms.
2. Access to mobile payment systems. Rely on the geographical location of your potential users to ensure payment opportunities.
The app is mainly focused on U.S. users, who would have no problem with accessing Stripe payments and choosing the currency. Stripe accepts major international debit or credit cards. At the same time, we found out that though the system works in Canada, Australia, currently it is not accessible in all European countries.
3. Types of payments available for or required by a business model need to be considered.
In most cases, the most convenient type option is a single payment, so a user can complete the process in just a few clicks. This is another reason why we decided to integrate Stripe - a user receives access to TV channels based on a subscription plan. Stripe mobile payment system supports recurring revenue, subscriptions, and special deals and coupons.
4. Transfer timing - the most reliable option is to use a mobile payment system that delivers money to your bank account fast.
Stripe currently takes up to two days after payment to make funds available for use.
5. Security issues and system integration.
Stripe offers proven protection. It is a certified PCI level I payment system that monitors any suspicious transactions. Card details from a browser to Stripe are transferred safely.
A mobile payment system should be integrated based on business needs, so if a user has only several payment choices, it is wise to use a system that directly responds to the actions required of a user.
The app we developed does not sell any variety of goods, but only requests one monthly payment to be made in a timely manner. For this, Stripe offers an easy solution with its "Pay now" button that allows completing payment in one click.
If you plan to create your own app, our strong team of mobile developers will readily help you with technology and other recommendations that will deliver an excellent product.
Stay tuned with the latest technology trends and projects.
Subscribe to Onix blog to receive interesting content right in your inbox.