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European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.8, No.8, 2016
127
The Future of the Mobile Payment as Electronic Payment System
Zlatko Bezhovski
Goce Delchev University, Krste Misirkov No.10-A, Stip, Macedonia,
Abstract
The development of the Internet and the arrival of e-commerce fostered digitalization in the payment processes
by providing a variety of electronic payment options including payment cards (credit and debit), digital and
mobile wallets, electronic cash, contactless payment methods etc. Mobile payment services with their increasing
popularity are presently under the phase of transition, heading towards a promising future of tentative
possibilities along with the innovation in technology. In this paper, we will evaluate the current state and growth
of mobile payments and other electronic payment systems in markets around the world and take a look at the
future of this industry. We analyze various systems of electronic payment services, security issues related to
them and the future of the mobile payment mode. This paper will also examines the factors affecting adoption of
mobile payment methods by consumers. With all the security and convenience provided by mobile electronic
payment method, we can expect further growth of mobile payments worldwide even surpassing payments made
by credit and debit cards. However, there are several barriers identified to the adoption of this payment method;
so certain measures should be taken to grant this industry a promising future ahead.
Keywords: e-commerce, m-commerce, Payment Systems, Mobile Payments, e-business
1. Introduction
In the year 1990, the advent of electronic commerce (e-commerce) introduced a unique way of doing trade
business to the consumer and business world. Since then, e-commerce has grown and changed incredibly with
producing extraordinary benefits for customers and business all around the world. With a large number of
organizations conducting business this way, it has become evident that the field of e-commerce has a promising
future ahead and businesses are going to obtain maximum benefit from it (Abrazhevich, 2004, p.1). Most of the
popularity gained by e-commerce is due to its online perspective of doing business. It enables buying and selling
of goods online, provision of various services and information on the internet and instant exchange of money
between transacting parties. Using e-commerce, business payments have taken the form of exchanging money
electronically and are called as electronic payments.
The electronic payment system is considered as the backbone of e-commerce and one of its most
crucial aspects. It can be defined as a payment service that utilizes the information and communication
technologies including integrated circuit (IC) card, cryptography, and telecommunication networks' (Raja et. al.,
2008). An efficient electronic payment system lessens the cost of trading and is thought to be essential for the
functioning of capital and inter-bank markets. With the advancement of technology, electronic payment system
has taken many forms including credit cards, debit cards, electronic cash and check systems, smart cards, digital
wallets contactless payment methods and mobile payments and so on.
E-commerce has become a rapidly growing market today. With the proliferation of tablets and
smartphones, the use of electronic payment methods has grown up to 21% in 2012 (Rau, 2013). The use of credit
cards was the major international means of online payment that dominated in a variety of transaction markets. It
was estimated that 95% of all e-commerce transactions in the United States are performed using credit cards
(Abrazhevich, 2004). Other widely used online payment alternatives are debit cards (with rising number of users
worldwide) and online payment systems like Paypal, Stripe or Skrill. With the availability of a variety of
electronic payment means including mobile payments, mediating services, and electronic currency, an
appropriate option can be chosen for a particular type of transaction (Paunov and Vickery, 2006).
As we know that security is the main concern of people today while using any technology because the
use of every technology is exposed to fraud, data theft, and stealing. It becomes more dangerous when the data
contains significant financial information (Raja et. al., 2008). Thus, despite the fact that e-commerce is a
growing field with an increasing use of its online payment services, its further development and widespread use
in future are dependent upon the security and authentication stability of various electronic payment systems
(Aigbe and Akpojaro, 2014).
The future of a specific electronic payment system depends upon how it overcomes the practical and
analytical challenges faced by various means of online payments. These challenges include issues of law and
regulation (buyer and seller protection), technological capabilities of e-payment service providers, commercial
relationships, and security considerations such as verification and authentication issues (Paunov and Vickery,
2006).
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.8, No.8, 2016
2. Major online payment systems
Studying various systems of electronic payments, Koponen (2006) explained that there are a wide variety of
online payment systems that have been developed in past few years and these systems can be broadly classified
into account-based and electronic currency systems. Account-based systems allow users to make payments via
their personal bank accounts; whereas the other system allows the payment only if the consumer possesses an
adequate amount of electronic currency. These systems offer a number of payment methods that include:
• Electronic payment cards (debit, credit, and charge cards)
• E-wallets
• Virtual credit cards
• Mobile payments
• Loyalty and Smart cards
• Electronic cash (E-cash)
• Stored-value card payments
Paunov and Vickery (2006) gives a description of electronic payment methods in their report
evaluating the online payment systems for e-commerce, a summary of this description is given here to look at
various characteristic features of the most commonly used online payment services.
2.1. Credit Cards
The most commonly used online payment mode so far was the use of credit cards. Initially, the security concerns
hindered in the adoption of credit cards for making online payments but later with the provision of more secure
features to protect every transaction made, customers developed trust on the use of credit cards. Applicability of
credit cards is a strong factor that contributed to its wide use throughout the world. Credit card companies have
established a wide network for their consumers ensuring a huge user base for a number of different transactions.
However, it is considered a less-suitable method for small businesses and customers that need to make small
payments due to high fees for credit cards (Paunov and Vickery, 2006). Aggregation or cumulative payment
solution can be a way to adapt credit card payment system for micropayments.
One of the major advantages of credit cards is their easy to use functionality with making online
