How do mobile money payments work? (2024)

FAQs

How do mobile money payments work? ›

Mobile money is an electronic wallet service. This is available in many countries and allows users to store, send and receive money using their mobile phone. The safe and easy electronic payments make mobile money a popular alternative to bank accounts. It can be used on both smartphones and basic feature phones.

Mobile money stores funds in a secure electronic account linked to a mobile phone number. In some cases the wallet number will be the same as the phone number, but not always – they can be different. Before sending funds to a mobile money wallet, please check with your recipient to determine the correct number.

The customer holds their device close to the NFC-enabled POS terminal, approximately within two inches and this initiates the transaction. Both devices use RFID technology (NFC is a subset of this technology) to pass encrypted information back and forth to process the payment, which happens within a matter of seconds.

A bank account is not required to use mobile money services—the only pre-requisite is a basic mobile phone.

However, there are also drawbacks to using digital wallets. They can increase fraud risk, erode transactional privacy, and expose consumers to non-FDIC-insured accounts. Merchants may also face challenges, such as the loss of valuable customer information and increased costs of accepting payments.

Mobile payments can be convenient, fast and secure. They can, however, be expensive and still vulnerable to issues with technology. In particular, if there are any issues with the host phone, mobile payments will be unable to work at all.

A mobile payment is a money payment made for a product or service through a portable electronic device such as a tablet or cell phone. Mobile payment technology can also be used to send money to friends or family members, such as with the applications PayPal and Venmo.

A digital wallet — is even more secure than a chip card because it doesn't use your actual card number for the transaction. As a security measure, your card information is only used in the initial setup of the wallet, helping increase mobile payment protection.

While mobile wallets store money digitally, mobile payment systems allow you to spend money digitally. Android Pay, Samsung Pay, Google Pay and Apple Pay are all examples of mobile payments.

What is the difference between e wallet and mobile money? ›

E-wallets specifically involve the storage of pre-loaded funds for online transactions, while mobile wallets, a subset of digital wallets, are accessed through smartphone apps for contactless payments using existing cards.

Mobile Money lets you send and receive money with the help of a mobile phone and the internet, while Mobile Banking allows you to carry out banking related transactions or transfers through a bank app.

You can use MTN mobile money to send and receive money, top MTN airtime, pay bill, purchase electricity, MTN post-paid, School fees, buy & pay for insurance, pay for airline tickets and other goods and services.

Three of the leading forms of MFS are mobile money transfer, mobile payments, and mobile banking. Mobile Money Transfer (MMT). Services whereby customers use their mobile device to send and receive monetary value - or more simply put, to transfer money electronically from one person to another using a mobile phone.

With mobile money, conventional payment methods like credit or debit cards are usually not stored, in contrast to mobile wallets. Rather, to make transactions easier, it uses specialised platforms and mobile networks.

Examples of mobile money services

M-Pesa: Safaricom's M-Pesa remains a dominant mobile money service in Africa, especially in its home nation of Kenya. Since its launch in 2007, M-Pesa has over 50 million users and handles roughly $314 billion in transactions annually.