When PayPal was first launched, it caused a huge stir in financial markets around the world. An online wallet, disconnected from a bank or credit card, and capable of making payments, transferring funds and holding cash had been unthinkable just a few years prior.
However, these days, the market outlook is quite different! Now, PayPal is considered to be way too big of a company, its processing times are slow, the fees are exorbitant, customer help is lacking and the currency exchange is disappointing. Today, there are a whole host of payment processors which offer a range of different services and products, all of which are helpful and well designed.
To get to know these processors better, we are going to dive into the technology that is driving the biggest and most popular payment methods currently available.
Mobile payments
As mobile technology has become increasingly common, so too have the options for mobile payments. There are now mobile wallets which allow users to save all their credit and debit card info to their phones for easy access and use.
Mobile wallets have become increasingly popular as we begin to rely on our phones and mobile devices more and more. Some of the most popular mobile wallets include Apple Pay, Samsung Pay and Google Pay.
The technology involved is similar to Bluetooth and is referred to as Near Field Communication (NFC). However, data transfers such as mobile payments require closer proximity than Bluetooth and they also have greater security than Bluetooth technology.
There are also closed loop mobile money systems, the biggest of which is called M-PESA. This technology allows users to transfer cash using their phones safely and securely. These types of mobile payments have become especially popular in developing countries where not everyone has a bank account and debit card.
Cryptocurrencies, blockchain and ledgers
Cryptocurrencies are certainly a hot topic, and it is not hard to see why. Decentralized currencies and blockchain technology are now considered to be very important aspects of nearly every industry. The technology may seem overly complicated or confusing, but in reality, it is quite straightforward.
Cryptocurrencies are digital, decentralized currencies that are created when a computer mines them. Mining involves a computer solving incredibly complex math problems. The person who mines the crypto can then go on to sell it or hold it as an investment.
Cryptocurrency transactions are recorded on a ledger which, depending on the type of crypto, is either public or private. These transactions are compiled in a block, which is then incorporated into a blockchain.
One prime example of how crypto payments have effectively taken over as the preferred payment type is the online gambling industry. Crypto payments are more secure and private than many other payment methods. As a result, they are ideal online payment methods. In fact, cryptocurrencies are such popular payment methods in the online casino industry that there are now entire online casinos which are geared towards specific cryptocurrencies.
Card networks
These are the payment methods which most of us are intimately familiar with. Card networks such as Visa and MasterCard ensure that payments are processed from valid bank accounts and if there is an issue at any point in the payment process, the network can step in to help sort things out.
The technology used in card networks is referred to as chip card technology, or chip and PIN, or EMV technology. This technology is essentially a secure method of storing and exchanging sensitive information, such as the card number, between the card holder and the merchant.
Card networks are a generally reliable way to pay, and they tend to have well-established procedures in place for when there is a hacking incident or dispute between a merchant and a buyer. However, there is less privacy available when using card networks than there is when using crypto wallets.
The future of payments
While it is impossible to tell the future – especially in the tech industry! – one thing is for certain: this is an industry which has a lot of potential, and which will continue to innovate. There is obviously a lot of money to be made in the payment processing industry and there are many aspects which could be improved.
Future companies can look to improve on processing times, security and safety, currency exchange and ease of use. The future certainly looks bright for the payment processing industry.
