DEFINITION of Mobile Payment

A mobile payment is money paid 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. Many banks have recently adopted technology into their banking apps that allow for customers to send money instantly to friends and family members directly from their bank accounts. Mobile payments are also made on site at stores by scanning a barcode on an app on your phone. The cost of the purchase may be deducted from a pre-loaded value on the account associated with the particular store, or paid by credit or debit card. Payment information is encrypted during transmission, so it is thought of as being a safer payment method than paying with a debit or credit card.

BREAKING DOWN Mobile Payment

Mobile payments first became popular in Asia and Europe before becoming more common in the United States and Canada. Early on, mobile payments were sent by text message. Later, technology allowed for pictures of checks to be taken via cell phone camera and sent to the payment recipient. This technology eventually morphed into mobile check deposit capabilities for banking apps. Recently, apps such as PayPal and Apple Pay were developed that allow payment by passing a smartphone screen displaying a special barcode under a store's barcode scanner.