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Paying with your mobile: how it works

66% of Brits know they can pay using a smartphone, and in the US 53% of shoppers want more stores to accept payments via mobile. Despite the enthusiasm for this growing technology, many of us still aren't completely clear on how it works. That's why we've put together this quick guide to mobile payments, which takes you through the three main approaches.

1. Banking apps

Tools like Paym and Zapp allow customers of partnering high street banks to send and receive payments through their phones. Usually these are built into banking apps, which makes them very simple to use.

You just download and log in to the app, choose your payment option, enter the recipient's mobile number and hit 'send'. While Paym is a peer-to-peer service, Zapp also lets you pay for your offline shopping. It'll either send you a code as you approach the till, or you can scan the code on your bill. You then log in and confirm the payment.

There are two main safety measures: the payment code expires after three minutes and money is transferred via a 'digital token', which contains no personal information.

2. E-wallets

Many e-wallets have similar apps. PayPal, for example, has just partnered with Shell to let UK customers pay at the pump with an app.

Like mobile payments, customers use the app to scan a QR code. And as with Zapp, you just need to confirm the purchase and your payment will be sent without ever revealing your personal information. 

3. Contactless payments

Technically known as near field communications (NFC), contactless is often considered the easiest way to send money. 

To pay this way, you'll need a smartphone with the right tech installed. This usually involves having a sticker or tag attached to the back of your phone, or a special SIM card inserted. Then you simply load cash onto the NFC software (a bit like an e-wallet), and use it to make payments under £20. You can do this at any retailer displaying the Visa payWave or MasterCard PayPass symbols.

As an added security measure, you'll be asked for your pin number every few transactions to make sure you're still you. And because your NFC software is connected to your cards, it carries the same anti-fraud protection as they do.

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