Mobile Payment Systems: What They Are & How They Work

Revel Blog | Julie Holkeboer | August 4, 2020 |

Advice Industry Insights and Trends

What is Mobile Pay?

Digital payment methods keep on evolving with every new technology introduced, and the hottest trend today is mobile pay. The idea of using your mobile phone to make payments is especially attractive to today's connected consumers.

But what is mobile pay, and is your business ready for it?

Today we'll talk about mobile payments and why you need to offer them to your customers. We'll also talk about how you can quickly implement this in your retail store or restaurant.

What is Pay Mobile?

Mobile pay, or mobile payment systems, is a general term that describes purchase transactions that you make using your mobile phone. It’s an alternative payment system to cash that’s similar to a credit card in that there's a whole technology behind it. 

A mobile payment system is a digital technology that builds upon existing payment methods like a credit card. In fact, it's often used as an extension of these payment systems. Some credit card networks like Visa, for example, allow you to make card payments using your mobile phone, without having to bring your physical card. Banks allow you to use cash mobile payments to digitally withdraw from your account to pay for purchases.

Mobile payment technology is flexible in that it can be used in both peer-to-peer or pay-to-business models.


Peer-to-peer allows you to send money from your mobile phone to another. For example, you can pay your friend your share of the rent via mobile pay, or you can use it to purchase stuff informally online by sending the money straight to the seller. To send peer-to-peer, you and the recipient need to have mobile pay compatible smartphones. It's much simpler to set up since you don't need any additional devices or peripherals.


If you’re a business, you can receive mobile pay transactions using the pay-to-business model. This is how, for example, you can use your mobile phone to shop at retail stores or dine at a restaurant. For this, you would need a point-of-sale device, often an NFC-enabled terminal. It does require additional equipment and setup, but the payment process is faster compared to the peer-to-peer model.

What is a Mobile Wallet?

If you’re wondering "how do mobile payment systems work?", you should know that a mobile wallet is at the heart of it. Much like your physical wallet, a mobile wallet is an app or website used to hold your funds. It is the money in this wallet that's used whenever you make mobile payments.

All of the major smartphone players have their own mobile wallet systems. Examples include Apple Pay for iOS users, Google Pay for Android users, and Samsung Pay for Samsung smartphones. You also have other third-party digital wallets available you can choose from, but the first three are the most common. If you’re looking to accept mobile payments in your business, make sure it covers these three.

Much like a wallet, you need to deposit funds into your mobile wallet first. You can do this via bank transfers, or adding funds with your credit card as you do with Paypal. Alternatively, you can link your credit card directly to your wallet, so that it gets charged whenever you use mobile pay. An example of this is Apple Pay, where you can sync and use your credit card details in the iTunes store.

All payment transactions, from receiving to sending, are handled using the mobile wallet app. That’s why it’s vitally important that you choose a trusted and secure mobile wallet provider.

How Mobile Pay Works

How does pay mobile work? In practice, it's straightforward. For peer-to-peer payments, you simply need to know the details of your recipient and set the amount. With Apple Pay, for example, it’s as simple as opening the relevant conversation in the Messages app and using the Apple Pay button to send money to that person.

To make a purchase using pay-to-business, you need to specify the amount you want to send using your mobile wallet app. You then hold your smartphone close (2 inches or less) to the terminal. Within seconds, your payment will be sent, and the transaction is completed.

Mobile payments use NFC, or Near Field Communication technology. This is a contactless technology that uses radio waves to send small bursts of data quickly and easily.

When the mobile phone is tapped near the reader terminal, it initiates a conversation between the two. Data is exchanged between them using radio waves until the payment process is complete. All of this happens in a fraction of a second. In fact, speed is one of the best features of NFC payments over EMV chips or magnetic stripes.

NFC also encrypts the data being transmitted, making mobile pay a much more secure method over credit cards.

Reasons to Use Mobile Pay

With different payment methods available to you, such as cash or credit cards, you might wonder why even bother with mobile pay. In fact, one technology, EMV, is already being touted as the next big step for credit card payments.

But the fact is that mobile pay offers significant advantages over other payment methods currently available. Here are some reasons why:


Security is one of the significant advantages of mobile payments, mainly when used with NFC technology. In fact, when combined with other security features already present in mobile phones, NFC offers a significant improvement over EMV.

One key aspect that makes NFC payments so attractive is tokenization. This is an encryption method that scrambles the credit card information data while being transmitted and stored. Your bank does this with a unique process and then sends it to your Apple Pay wallet for storage.

If hackers were to steal this data, all they would get is useless, meaningless gibberish. This data is also dynamic, which makes it impossible for thieves to try and decipher it.

Most mobile wallets also have layers of security to ensure that you’re the one who’s making a transaction. For example, Apple Pay requires that you provide your fingerprint scan using Touch ID whenever you make payments. Since it’s impossible to replicate your fingerprint, thieves can’t access your mobile wallet even if they steal your mobile phone.

Then there’s the fact that using NFC contactless payments require that you’re physically present to make the transaction. Compared to paying over the Internet, this is a much more secure method.


Speed is the best feature of mobile payments using NFC, and it’s light years ahead of magnetic stripes or even EMV. That’s significant because EMV is already a substantial improvement over previous payment technologies.

NFC allows you to easily tap and pay in fractions of a second. In retail stores or restaurants where there’s a large volume of transactions, this is especially handy in speeding up your turnover, therefore increasing your sales.


Using mobile pay is not just convenient for you as a business, but also for your customers.

Mobile pay doesn’t require people to bring loads of cash when going out, which in itself can be a security issue. And for people who have multiple credit cards, mobile wallets provide a convenient way to consolidate them into one payment system.

Most people nowadays already have their phones at their side at all times, so mobile pay essentially becomes a payment method that’s available 24/7. They also don’t need to buy any additional devices. As long as they have the newer smartphones, mobile payment is built into them.

It’s also much easier to send payments to other people straight to their phone, as opposed to having to withdraw it in an ATM and then sending it to them physically. In times of crisis where you can’t go out as much, mobile payments are also incredibly fantastic solutions.

How to Accept Mobile Payments in Store

If you’re interested in offering mobile payments for your business, you need business POS software that can support this feature. While this might be expensive for most platforms, it doesn’t have to be. The key is choosing a point of sale device, like Revel Systems, that has this feature built-into the solution.

Revel Systems iPad-based point of sale can seamlessly integrate with today’s mobile and digital payment systems. Apple Pay users can send in payment data directly from their phone to Revel’s payment hardware using NFC technology. Revel also supports a wide variety of payment processors for easy acceptance of other methods like Visa and Mastercard.

Ready to support mobile payments in your business? Revel Systems’ innovative POS solution gives you the flexibility to accept various payment methods. Schedule a free demo with us today and see how our point of sale solution can make a difference for you.