With over 299 million global customers, mobile money has emerged as the most prominent digital payment instrument in many developing countries. Mobile money transactions are currently dominated by airtime top-up, P2P transfers and bill payments. Merchant payments occupy 1.3 per cent of total transactions. To achieve the aim of a truly cashless society, mobile money transactions should move beyond the ‘once a month’ bill payments and P2P transfers to ‘daily’ merchant payments.
Though many mobile money providers offer merchant payments service, the payment process is long and cumbersome, this limits the growth of the service. To entrench the use of mobile money in the daily lives of consumers, mobile money service providers need to offer an easy to use and convenient method of merchant payment.
In this scenario, closed loop NFC payments make convenient merchant payments a reality, by bringing the ‘tap and pay’ simplicity of NFC while addressing consumer and merchant related adoption challenges. It provides merchants with a NFC POS device linked to the merchant’s mobile money account. The product equips consumers with a NFC card or an NFC-enabled handset.
To initiate a payment, the merchant enters the amount in the NFC POS. The consumer simply taps the NFC card over the NFC POS to complete the transaction. In case of a small value transaction, the consumer does not need to enter a PIN. Removing this step for micro-payments makes the process faster and simpler. Large value payments are protected by a PIN. The consumer receives a message confirming the payment instantly on his mobile.
Why Closed Loop NFC Payments?
Such payments bring value to the entire ecosystem. Encompassing consumers, merchants and mobile money service provider, closed loop NFC payments dramatically revitalizes mobile merchant payments.
- By simplifying the merchant payment process, this type of payment offer consumers ease of use and greater convenience. Consumers no longer need to accept toffees instead of change or worry about dropped money, as they get their balance to the last decimal and all money is secured in a digital format.
- It allows merchants to accept mobile money payments easily, increasing the number of transactions. Closed loop NFC payments can be used by businesses of any size – whether a large shopping center that needs to process payments faster, a local pizza delivery that serves the neighborhood, or a taxi cab on the move.
- For mobile money providers, closed loop NFC payments accelerate merchant payment transactions which translate into increased revenue.
