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If you are interested in implementing mobile payments for your business, here you can learn about the possible options, how a mobile payments gateway works, how to choose the right solution, and how to integrate it with your mobile app.


Payment processing is critical to any business. If it wants more sales and happy customers, it should offer the best buying experience possible. Mobile payments, i.e. electronic payments processed through a smartphone, tablet, or smartwatch, help with both tasks. 


The penetration of mobile devices into our daily lives and shifting away from cash have resulted in the rise of effortless direct, real-time mobile payments. Millions of consumers have appreciated shopping with mobile devices, but many vendors still don’t know that their tablet or smartphone can replace the cash register, banking terminal, and analytics system for their small business. 

 

The share of mobile sales in e-commerce has been steadily growing for years. Still, a long and complicated checkout process or lack of convenient payment methods often prevent shoppers from purchasing something online.

 

With the number of mobile users exceeding 5.22 billion and people spending more time on mobile devices, mobile commerce will continue to grow every year. Whether you’re going to sell physical or digital goods and services, mobile payment integration seems inevitable. 


Moreover, it is crucial to implement an easy, smooth, quick, and safe mobile checkout process, and the payment system must be secure, easy to set up, flexible, and cost-effective.


Let’s start with some of the most common ways to use mobile devices for making and receiving mobile payments. 

 

Different Mobile Payment Methods

Classification is important because different types of mobile payment apps support different methods.  

 

Read also: How to Build a Personal Finance App like Mint


Mobile as point-of-sale

This method is most effective for in-person sales, e.g., at small stores, restaurants, markets, or events like fundraisers or trade shows. Businesses and organizations can turn smartphones or tablets into point-of-sale (POS) systems for on-the-go credit card acceptance.


An add-on credit card reader can be paired with the mobile device, allowing customers to swipe, dip, or tap credit cards to make a payment and the vendor to accept it on the spot.  


Even without a credit card reader, they can log into a virtual terminal app on their mobile device and manually enter credit card or ACH information to accept payments.



Clover, Lightspeed, Shopify, Square, Toast, and Vend are some of the popular mPOS systems for smartphones and tablets.


Advantages:


  • credit card model
  • suitable for small businesses that have no cash register
  • there is no need to install a mobile payment system for a consumer

 

Disadvantages:


  • often higher transaction fees compared to other systems
  • not suitable for businesses with large revenue due to the systems’ fraud detection mechanisms
  • risk of a credit card or identity theft


Mobile at the point-of-sale

These payment systems are known as mobile wallets. They are saved on mobile devices. Contactless payments are conducted using near-field communication (NFC) or "tap and go" technology. Businesses wanting to accept such payments need an NFC-enabled mobile card reader and/or the appropriate mobile app. A customer waves their mobile device across a reader that wirelessly captures the relevant payment information to complete a purchase.

 

Nowadays, most mobile devices come with NFC technology. Apple Pay is available on iPhone 6 and newer models. All Android phones are equipped with Quick Access Wallet, many with Google Pay, and Samsung phones – with Samsung Pay app. In addition to preloaded apps, users can install third-party mobile wallets, such as PayPal and Venmo. 

 

Mobile wallets are handy not only for in-store payments. Customers can also check out online using a mobile wallet if the vendor accepts their preferred app.


Advantages:


  • NFC technology is available on most smartphones
  • consumers can use their mobile devices instead of carrying around cash or debit/credit cards and having to swipe or dip the cards physically
  • contactless payment systems are safer than card swiping 

​​

Disadvantages:


  • credit card data is saved in the system
  • sensitive information is exposed to the payment system’s owner
  • possible cooperation issues between credit card service providers, phone manufacturers, and merchants


Mobile payment platforms


Platform systems are based on WAP (Wireless Application Protocol) technology: a mobile device connects to an online payment system or requests card data via a website.


Mobile browser-based payments enable card-not-present purchases with a credit, debit, gift card, or even ACH. Using a smartphone or tablet, they can visit an online store, add products or services to a shopping cart, and enter payment details into the website’s checkout form to complete a purchase.

 

In-app mobile payments are similar, but users open up the store’s or business’ mobile app instead of a website. Having registered their card or ACH information once, they can make purchases, download content, or pay bills with a few clicks using that information.


A travel, lodgings, hotel, doctor appointment, or event booking app, online store or marketplace, educational app, micro-investing or banking app would likely employ popular payment processors like Apple Pay, Google Pay, PayPal, or Stripe.


Advantages:


  • credit card data is security encoded
  • no need to carry a credit card

​​

Disadvantages:


  • bank and card service fees apply
  • possible cyber-attacks on the system


Direct carrier billing

Payments in these systems are tied to a consumer’s monthly phone bills either through SMS or in-app billing. Mobile bank transfers are more common for bill and peer-to-peer payments. They are transferred directly out of the consumer’s bank account into the payee’s account.

 

Boku, Docomo Digital, Fonix, Fortumo, and Google Pay are examples of direct carrier billing providers. 


Advantages:


  • no need to have a card reader, POS, or the newest smartphone model to make purchases
  • no need to create a username and password
  • no credit card or personal details are required
  • only one bill that is tied to a mobile service provider

​​

Disadvantages:


  • 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

Large companies, such as Facebook, Starbucks, or Wargaming, have their own billing systems.  A user downloads a branded payment system application, puts money on a debit card to pay for their future purchases, and receives a full scope of store services: coupons tracking, gift cards, loyalty rewards, etc. The payments are deposited and withdrawn directly from that card.


For instance, Facebook Pay allows people to use Facebook, Facebook Messenger, Instagram, and WhatsApp to send money to other people. Linked payment methods include a debit card of their choice or an existing PayPal account. 

   

The Starbucks app is reportedly the second most used mobile payment app for POS transactions in the US.



Advantages:


  • saves space in a wallet while keeping track of special offers
  • high safety (card data is not transferred to the merchant)

 

Disadvantages:


  • this payment model does not work for all business models
  • putting money into the card may be inconvenient for some users


There are two ways an app can process online payments, depending on the type of goods it sells:


1. App Store methods for virtual goods

Suppose you want to sell subscriptions, premium accounts, or additional features via an application distributed by Apple App Store or Google Play Store. In that case, all transactions must go through the particular user accounts via Apple ID or Gmail, respectively. A game or a dating, mental health, fitness, or photo editing app will likely include such in-app purchases.


Both Apple and Google prohibit the use of any third-party payment services. Instead, Apple provides the developers with their specialized StoreKit framework and Google – a dedicated In-App Billing API for Android developers.


You can learn how to integrate payment systems for in-app purchases here:

https://developer.android.com/google/play/billing/integrate

https://developer.apple.com/in-app-purchase/


2. Payment gateways for physical goods

If you sell products and services outside the app, both Apple and Google recommend using third-party in-app payment solutions – the subject of this article.


How Do Mobile App Payments Work?

A mobile payment gateway is a front-end in-between service that authorizes and processes payments between a user’s payment portal (mobile device) and a vendor’s bank. It enables payments by credit and debit cards, e-wallets, bank transfers, and local payments.


Technically, a payment gateway is an application programming interface (API) that app developers integrate to enable an app to talk to a payment platform. It performs the encryption of cardholder data, authorization of payment requests, purchases confirmation, etc. Leading payment platforms provide APIs that work with a mobile app’ backend language. 


When a customer makes a purchase, their card information is sent to the payment gateway, which sends a request to the card-issuing bank. The bank checks whether there is enough money on the cardholder’s balance and sends the request to the payment system (MasterCard, VISA, etc.). The system confirms or rejects the transaction, while the data is also handled by a payment processor at which the vendor has a merchant account, although some processors have their own gateways.


If everything goes well, the bank confirms the transaction and then sends an authorization code to the payment gateway. The latter transfers the money to the vendor's bank account. Ideally, the complex process takes a few seconds.

A payment gateway passes the transaction data using security protocols and encryption to prevent fraudulent transactions. The SSL (Secure Sockets Layer) protocol helps encrypt the information to protect card details and other sensitive information. Most mobile payment providers don’t store raw cardholder information but encrypt or tokenize it.


Encryption makes the data unreadable for anyone without a secret decryption key. Tokenization substitutes sensitive information with a token, an algorithmically generated non-sensitive counterpart. Thus, the actual card data is never exposed during mobile app payment processing. Even if bad guys hack the system, they will obtain only a bunch of randomized devalued symbols. 


Additionally, most payment systems use HTTPS, IP address verification, and even request signatures. 

 

Mobile payments require that merchants and payment card processors should secure the users’ financial information and meet PCI compliance standards. If you intend to create a payment system from scratch, the PCI certification necessary for accepting mobile payments can be complicated and time-consuming. Instead, integrating one of the existing PCI-certified payment gateways into an application is the most efficient way to proceed.


There are dozens of providers on the market, and it may be tricky to choose the one that best meets your business goals without breaking the bank or shifting the burden of hefty fees onto your customers. The following chapters list some of the world’s most popular providers, the selection criteria, and a general algorithm for payment gateway integration.


How to Choose the Right Mobile Payment System?

Some of the best and most popular mobile payment gateways to integrate into your app include, but are not limited to:

There are dozens more. The fastest and easiest way to choose the optimal solution is to ask experts. For example, mobile app developers at Onix-Systems will consider all the crucial factors, recommend a payment system that best meets your business needs, and, if needed, perform the payment gateway integration quickly and at a reasonable price.

 

If you wish to conduct the research and make the decision on your own, it’s essential to pay attention to the following:


Your business needs

Different mobile payment gateways support different payment methods and have distinct features geared towards specific business tasks.


For example, Braintree is one of the best choices for eCommerce platforms. Apple Pay facilitates easy and secure payments for goods, services, subscriptions, and donations. Stripe supports recurring billing, subscriptions, and special deals and coupons, and can integrate social media payments. It also supports Apple/Google Pay and can help organize proper monthly reporting on your financial practice. WePay reportedly doesn’t handle big transaction flows well but is praised for its security and offers fraud and risk protection as a service.

If you choose mobile payment processors that support multiple options and devices and cover all major credit cards and devices with popular digital wallets, you maximize your potential customer base. A service with rewards and loyalty programs for consumers can entice them to make mobile payments at your business.


Pay attention to the type of account offered. Aggregated and dedicated seller accounts are suitable for different business needs. An aggregated seller account provides a smooth route but comes with longer money transfers. If you need faster funds processing and greater control over finances, opt for a dedicated seller account, although it is costlier to purchase and implement.


The geographical location and preferences of your target audience

Make sure that your mobile payment gateway provider will work in your target locations. For example, PayPal works in over 200 countries, while Stripe is supported in 47 countries currently.


Find out your customer’s favorite payment methods. Remember that people appreciate multiple payment options in an app. Also, some payment gateways might be more popular in certain countries. For example, Americans prefer to pay using PayPal or credit/debit cards (which requires the integration of Braintree, Stripe, Authorize.Net, WorldPay, or a similar payment gateway for mobile apps).


If your business is global, make sure your payment gateway provider supports multi-currency payments and accepts major international debit/credit cards.


Security and certifications

Apple Pay and Google Pay may be safe, but they don’t reduce the burden of PCI compliance. Therefore, they need to be integrated with a PCI-compliant payment platform, such as Braintree or Stripe, and the card-issuing bank must be PCI-compliant.


Make sure that the mobile payments provider has SSL and PCI DSS badges. They show that the gateway follows industry security standards and provides data encryption. An anti-fraud system for protection from illegal actions is mandatory for successful mobile credit card payment integration.

 

If a provider is outside of the top lists, find out how long it has been on the market and whether any big companies have entrusted it with their mobile app payment processing. Negative feedback and poor ratings should raise red flags.

 

Speed and ease of use

It is essential to check how quickly a user can complete the payment process. A single payment is the most convenient option, which users ideally should complete in a few clicks. 


Small businesses also need to compare various mobile payment systems’ transfer speeds which can affect cash flow. The average time to deliver money to a bank account is three days. If you need funds fast, consider “instant” deposit processors. However, they are pricier, so weigh the pros and cons carefully.



The cost

All mobile payment gateways charge fees. AuthorizeNet, Braintree, PayPal, Stripe, and WePay charge around 2.9% + $0.30 per transaction, others slightly less or more. Per-transaction fees vary based on the location, card network, and payment method. A fee can be static or depend on the number of transactions. Providers may also require monthly gateway fees, like Authorize.net and PayPal Pro do, and setup, integration, currency conversion, and other fees. 


When the business’s size reaches a certain limit, paying for each transaction is no longer viable, and monthly subscription-based billing becomes preferable.


Watch out for “hidden” fees. Some companies require a monthly subscription for systems that house their payment processing app. Also, check whether there are separate fees for PCI compliance, fraud protection, or other essential security features. Also, look carefully at payment limitations. Providers can limit transaction sizes or the number of transactions per day, week, or month, affecting your sales. 


Scalability and customization

If your business is growing, think ahead regarding how your mobile payment gateway provider is going to meet your scaling needs. For instance, Square’s flexible tools easily adjust to the size of a business’s operations. 


Users like bespoke payment forms. Try to choose a service that provides interface customization abilities. If you want the design of the checkout process to match your app and website, use Stripe or Braintree.


The technicalities of payment gateway integration

The integration process should be straightforward and take minimum developer time. Payment processors normally provide SDKs (software development kits, development tools that facilitate the creation of software products) for mobile app integration. Pay attention to the SDK size: it should occupy minimum space on users’ mobile devices. Also, make sure that it supports your mobile app’s platform and framework and try to pick the one that offers multi-platform and multi-framework support.


Stripe provides a rich API library in multiple languages: Java, PHP, Python, Ruby, etc., and ensures smooth and effortless integration into the application. The system also offers well-designed checkout forms. However, as a downside, Stripe is not easily mastered. At least some basic knowledge of the web development languages is required to set it up properly.


App developers like Braintree because it supports six programming languages and can be integrated in mobile applications in the shortest time.


WePay API is written exceptionally well. It is easy to integrate into any e-commerce platform but better suits smaller enterprises. 


How to Integrate Mobile Payment System into Mobile App

Each mobile payment gateway provider has a software development kit (SDK) and detailed guides and documentation that allow a quick setup of secure online payments and guarantee safe data transfer. Here are major mobile payment systems’ integration SDKs


for Android app developers



for iOS app developers



The details may vary depending on the platform and tools, but the general integration steps are the same. Below is an example of a payment gateway integration, Braintree in this case, into an iOS app.


Step 1. Set up the client to call your server



Step 2. Set up the server to call the Braintree SDK

At this step, the app’s server is set up for calling the Braintree SDK to set up and execute the payment.



Step 3. Create an effective checkout interface

This step may require the participation of a professional UX/UI designer because it requires the knowledge of the platform’s material design but also the psychology of mobile shoppers. For instance, they often interact with their devices using just one thumb. 


The payment page should be as simple and minimalistic as possible. However, it is still a good idea to include information related to your security measures and protection of the customers’ personal and financial details.


If verification and authorization take time, the app should inform the user. Suppose an error occurs during a mobile payment. It should explain the reason, e.g., incorrectly filled payment form, insufficient funds on the card, or a technical problem, and suggest ways to solve it, e.g., choose another payment method, try to pay later, contact support, etc.


Professionals can perform a payment gateway integration within one working day.


If your team lacks the expertise necessary for payment gateway integration or the entire mobile app development, we recommend hiring professional mobile app developers. You can hire an in-house development team or contract an external development team or company. Working with an agency is pricier but comes with the benefits of project management, quality assurance, modern design, expertise built during previous projects, etc.

 

If you plan to create a mobile application, Onix’s mobile developers are ready to help you release an excellent product. 


Onix’s Experience in Mobile Payment Gateway Integration

Our team has worked in the FinTech domain for years, completed multiple projects involving mobile app payment processing, and has vast experience selecting and integrating various payment systems into iOS and Android apps.


We always start with learning about the customers’ needs and consider all the crucial factors to choose the best payment gateway for every unique project.


PhotoWhy is a recent example. The hybrid mobile app combines a social network with a peer-to-peer learning app for photographers. The platform is unique in its emphasis on learning the art of photography. Enthusiasts can 


  1. watch daily live streams where the world's top photographers share their experience and tips on how to compose and take better photos
  2. receive constructive feedback on their particular shots or entire portfolio from a chosen professional
  3. book a one-on-one mentoring session/masterclass where they can get answers to their most burning questions or even work with the pros


These abilities required in-app payment solutions. In-app currency is used for convenient transactions between users. Amateurs can buy the in-app currency with real money and the professionals – withdraw real money converted from the in-app currency they earned.


Onix’s programmers implemented Stripe, Apple in-app purchase API, and Google in-app subscriptions to support these operations.


misterb&b is one of Onix’s long-lasting projects. The online rentals marketplace known as the ‘gay Airbnb’ relies on Stripe to support transactions between 300,000+ hosts and millions of travelers across 200 countries.


Final Thoughts

Two main factors determine the choice of a payment gateway that is essential for all commercial mobile apps. 


The first is the business idea. The choice among many payment platforms with different conditions, payment policies, and commissions depends on the application’s tasks, monetization strategy, the cost of similar goods and services with competitors, etc. The region in which business is conducted also matters; local players sometimes offer more favorable conditions.


The second is the platform on which you want to distribute your application. Google Play has a more relaxed policy regarding payments and less stringent app reviews. Apple’s App Store has a number of strict rules; non-compliance can lead to delays in the publication until the issues are resolved.


To sum up, if you plan to sell subscriptions, virtual coins, etc., you will have to integrate in-app purchases via Apple and Google. If your startup intends to sell physical goods, such as clothing, sports equipment, etc., via iOS and Android applications, virtually any payment gateway will do.

Other payment methods are less common and are determined by a particular business’s specific tasks.


Although popular payment systems, such as PayPal, Braintree, or Stripe, provide their SDKs and detailed documentation, payment gateway integration requires not only coding but also design thinking, end-user testing, and project management.


It is generally recommended that entrepreneurs should hire a development team that will do all the integrations and settings, saving their time and money.


  • Do you have trouble deciding on a payment gateway provider?
  • Don’t know how to implement a payment gateway
  • Need professional advice or experienced mobile developers in your team? 


Onix will gladly share its experience, help with any issues and needs, or build a whole mobile app for you from A to Z. Your reliable software development partner is one click away!



Frequently Asked Questions


What is a mobile payments gateway?

A mobile payment gateway is a mechanism that allows users to pay for purchases directly from a mobile device and enables vendors to accept online payments. Technically, it is an API (application programming interface) that app developers integrate to enable the app to talk to a payment platform. 


What is the best payment gateway for mobile apps?

Software developers will likely name PayPal, its subsidiary Braintree, and Stripe among the top mobile payment gateways to integrate into your app.


How does one integrate payments in a mobile app?

  • First, determine the mobile payment method most suitable for your business and customers.


  • Select a payment gateway for mobile apps that supports the desired payment method. Consider the countries and card systems it covers, transaction and other fees, security certificates, speed of money transfers, quality of user experience, ease of integration, and other criteria important for your business.


  • Contact the chosen service provider and get the necessary tools to integrate the payment gateway into your iOS or Android app.


  • If needed, engage professional mobile app developers to do the job.


  • The details of the integration process may vary depending on the platform, the chosen payment gateway, and development tools, but the general steps are similar:


  1. Set up the client to call your server
  2. Set up the server to call the payment gateway’s SDK for the platform
  3. Create an effective checkout interface


How to implement a payment gateway in an Android app?

Popular mobile payment systems can be integrated into Android apps using special software development kits (SDKs), such as:



How to integrate a payment gateway into an iOS app?

Popular mobile payment systems can be implemented into iOS apps using special SDKs, such as: