Mobile payments are becoming increasingly popular. It’s quick, hygienic and uncomplicated. But how does your own smartphone become a digital wallet?
What is mobile payment?
Mobile payment refers to the cashless payment of goods and services using a smartphone, tablet or wearable device. The transaction usually takes place via near field communication (NFC), in which the device is briefly held against the card reader. Instead of conventional card data, so-called tokens, encrypted placeholders, are transmitted to ensure security. Mobile payment offers both convenience and hygiene benefits as it does not require direct contact with cash or devices, explains a Commerzbank article.
Requirements for mobile payment
In order for mobile payment to work, the smartphone must have near field communication (NFC). This technology enables the wireless transmission of data between the smartphone and the payment terminal. Most modern devices are already equipped with this function and can be activated accordingly in the settings. In addition to the technical equipment, a suitable payment app is required, which varies depending on the operating system. Google Pay is the default solution for Android devices, while Apple Pay is for iOS-User is available. Banks such as ING and Sparkasse also offer their own apps that were developed specifically for their customers.
This is how users load their bank card into their smartphone
The integration of the bank card begins with downloading the corresponding app. The card is added there either by scanning or by manually entering the data. To ensure that the card actually belongs to the user, verification is carried out, usually via a code via SMS or directly in the banking app. Once this process is complete, the digital card is ready to be used for payments. The payment process itself is intuitive: the smartphone is simply held up to an NFC-enabled terminal and the transaction is confirmed by entering a PIN or biometric methods such as fingerprint or facial recognition.
Mobile payment security
Security plays a central role in this technology. Instead of transferring the actual card data, encrypted tokens are used to prevent misuse of the data. This process, known as tokenization, ensures that the user’s sensitive information is not passed on directly, according to Stiftung Warentest. The smartphone is additionally secured by locking mechanisms such as PIN, fingerprint or facial recognition during a payment process. Regular updates for the operating system and payment apps are also crucial to avoid security gaps. Despite these measures, a certain level of vigilance is warranted, particularly when third parties could access transaction data.
Advantages and possible limitations
Mobile payment offers numerous advantages. The payment process is quick and convenient as neither cash nor a physical card is required. Hygienic aspects also play a role, as there is no direct contact with card readers or change. These points make the technology particularly attractive. However, there are also limitations, as mobile payments are not possible without a battery, and data protection concerns remain an issue. Some providers could use transaction data for advertising purposes, as the consumer advice center warns.
Editorial team finanzen.net
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