Everything You Need to Know About Mobile Payments as a Retailer

Mobile payments

Having plenty of payment options is an afterthought for most consumers. But as a seller, offering mobile payment options that enable the use of modern payment methods like a digital wallet can mean more sales and faster transactions. 

Payment methods are increasingly becoming digital. There’s plenty of data to back up the trend too. Digital wallet usage was up by almost 30% in 2021, an increase of 23% from the previous year. 

To help, here’s everything you need to know about mobile payments, from their benefits to how they work to how to start accepting them with a POS system.

What are mobile payments?

Mobile payments are a way to accept and make payments through a smart device, like a smartphone, smart watch, or tablet. Beyond the traditional cash or card transaction, mobile payments add an extra layer of security and convenience to transactions for all parties involved because of encryption technology. 

Encryption technology makes it possible for sellers or individuals to accept mobile payments that are enabled, by linking a bank account, a credit card, or a debit card. 

What is a mobile wallet?

A mobile wallet is a digital wallet that lives in your phone. You can add bank, credit, or debit card details to start paying for goods and services without the need for a physical wallet. 

The convenience of a mobile wallet is probably why an estimated 1.6 billion consumers will pay at the point of sale (POS) with digital wallets as early as 2023.

An additional upside of carrying a mobile wallet is the security factor. You don’t have to worry about getting your physical wallet stolen. Its encryption feature enables secure payments. 

How do mobile payments work?

Mobile payments are built on one-to-one NFC (near-field communication) technology that enables smart devices to share information when they’re close to each other. 

NFC technology is a subset of RFID technology, which uses radio waves to identify encrypted transactions. The need for proximity to process mobile payments adds an extra layer of security. Once an NFC-enabled point-of-sale system gets tapped by a customer’s smart device, the transaction is processed almost instantly.

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Benefits of mobile payments

  • Convenience
  • Speed
  • Security

Besides eliminating the bulky burden of physical wallets and purses, there’s a lot of upside that comes with the adoption of mobile payments. 


The inconvenience of counting physical money, writing checks, using gift cards, or paying with a credit or debit card is virtually eliminated with the use of mobile payments. Plus, as mentioned earlier, it adds an extra element of security, since you don’t have to handle cash publicly. 

If you shop at popular retailers like Kohl’s, Petco, Whole Foods, or Best Buy, you’ve likely seen the convenience of mobile payments in action. Customers tap their phone, pay instantly, and go about their day.

Incorporating mobile payments has been such a big relief for us, most importantly because we have been under a global crisis. It maximized our customers’ time and convenience in securing payments.

Through mobile payments, Nature & Bloom has been able to reach more customers, including the Gen Z and millennial demographic.

They like the idea of not thinking too much about their cash on hand, and the safety of physically interacting in order to pay.

Andrea Chapman, Marketing Manager, Nature & Bloom


 A key part of the convenience mobile payments offer is speed. Whether you’re checking out online, at a brick and mortar store, or processing a peer-to-peer transaction, mobile payment technology lets you finalize transactions in seconds. 

💡 PRO TIP: Skip the manual entries and reconciling for online and in-store purchases with Shopify’s integrated payment processing. Accept credit, debit, and mobile wallet payments and track online and in-store sales and payments from Shopify admin.


An individual security code is generated as you make purchases through a mobile wallet. This eliminates the risk of having your credit or debit card numbers stolen both online and in-person. 

Mobile wallets also come with an element of tokenization, which is used to secure bank details. Let’s say you’re using your credit cards to pay for transactions. 

As you upload your credit card information to a mobile payment system like Google Pay, your sensitive credit card information is replaced by a series of randomly generated numbers, called a token. 

This token can then be used to execute digital purchases while your real credit card information stays stored safely. This technology is effective in lessening fraud when processing digital transactions 

Types of mobile payments

  • NFC mobile payments
  • Browser-based mobile payments
  • In-app mobile payments
  • Peer-to-peer mobile payments

Different types of mobile payments exist to facilitate different types of transactions. These include: 

NFC mobile payments

NFC payments allow for wireless data transfers from one device to another when they’re close to each other. Mobile payment systems like Google Pay, Apple Pay, and Samsung Pay use NFC technology to facilitate contactless transactions around the world. 

Some countries are starting to use NFC technology beyond just payment processing as a way to verify identification. No need for the standard chip technology or a debit or credit card. 

Browser-based mobile payments

Browser-based mobile payments facilitate card not present (CNP) payments online. Once you navigate to the mobile checkout page, it lets you enter your payment information to complete your transaction. 

If you’ve ever bought anything online, chances are you’ve used browser-based mobile payments. Its built-in interface makes the checkout process quick and easy. 

In-app mobile payments

In-app mobile payments are exactly what they sound like. They’re digital payments that you can make within an app. In-app payments make it easier for businesses to sell goods and services within an application’s ecosystem that they control. 

All you have to do is register your payment information to begin making purchases. Just about anything imaginable can be purchased in-app, which makes for a better user experience and higher conversion rates, and eliminates the need for users to leave the app to make purchases.

Peer-to-peer mobile payments

Peer-to-peer payments, or P2P transactions, are money transfers between two users. These are enabled through platforms like Venmo or PayPal and let users send money through their smart device.

Once your bank or card information is entered, you can pay friends money you owe, split purchase payments with family, or split bills with other users. 

Accepting mobile payments

About 53% of merchants plan to expand their mobile payment options in 2022. What if you want to be one of them? First, it’s necessary to install a robust POS system that enables the process. 

Point of sale

Efficiently accepting mobile payments takes a point-of-sale system with the technology necessary to process these payments. The best POS system enables you to sell both online and in-person and automatically tracks your most important sales information, including inventory, unified reporting, and loyalty programs. 

With powerful POS software, you’re able to turn your mobile device into an efficient checkout system through a customizable POS terminal.

A mobile-payment enabled POS system:

  • Tracks key sales data
  • Increases revenue
  • Quickens transactions for a smooth checkout experience 

Shopify’s POS system is equipped with the capability to process mobile payments so that your customers have a variety of payment options regardless of whether they’re purchasing from you online or in-person. 

📌 GET STARTED: With Shopify Payments, you can accept all popular payment methods and local currencies for a convenient, high-converting checkout experience at your stores and online.


On the customer side of things, a smart device is necessary to complete a mobile transaction. As mentioned earlier, close proximity radio wave technology enables smart devices to communicate transactions back and forth safely. 

However, mobile payments technology is evolving fast, which means retailers need to take heed.

Apple’s latest tap-to-pay announcement paints a picture where iPhone users will make Apple Pay purchases with a simple tap by the end of this year. No hardware or physical payment hub necessary.

App developers will also have access to the feature, including the Shopify Point of Sale app. What does this mean for the future of retail? The adoption of Apple’s tap to pay feature will help increase consumer security and privacy, which is good news for retailers, both online and in person. 

It’s safe to say, Apple’s one-tap payment feature is a simple step in the direction of increased sales and higher customer loyalty, especially where mobile payments are concerned.

On average, we’ve seen a 30% uplift in mobile conversion rates when implementing streamlined mobile payments platforms. This could be things like Shopify's Shop app, or Paypal integration, or even BNPL softwares such as Klarna or [Australian-based] AfterPay.

Start accepting mobile payments at your store

Mobile payments are becoming an increasingly popular way to accept payments conveniently with an added layer of security. Carrying around a physical wallet may no longer be necessary for consumers if they’ve set up mobile payments through their smart device. It isn’t a stretch to think that even licenses and health cards will also be digitized. 

As more retailers establish mobile payments as the norm, the need for a POS system that can handle mobile wallets will only increase. With a dynamic POS system that takes care of both your in-person and online seller needs, you’re able to unlock additional transactions with more speed and efficiency than ever.

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Mobile payments FAQ

What is considered a mobile payment?

A mobile payment is a type of payment made using a mobile device, such as a smartphone or tablet, to purchase goods or services. It can be done either through a mobile app or via text message. Examples of mobile payments include Apple Pay, Google Pay, PayPal, Venmo, and Zelle.

What are the four types of mobile payment?

  • Near Field Communication (NFC): This is a contactless payment system that uses radio frequency technology to enable quick and secure payments.
  • Mobile Wallets: This mobile payment system allows users to store their credit and debit card information on their device, allowing them to easily make purchases with their phones.
  • Direct Carrier Billing: This is a mobile payment system that allows users to bill purchases directly to their phone bill.
  • Mobile Apps: This is a mobile payment system that uses an app to enable users to make purchases with their phones.

How do you use mobile payments?

Mobile payments are used by downloading a digital wallet app onto a smartphone, such as Apple Pay, Google Pay, Venmo, or PayPal. Once the app is downloaded, users can link their bank account or credit card to the app, and then use it to make payments in-store, online, or in-app.