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M-commerce, or the buying and sale of goods and services using mobile devices, is one of the most important advancement in e-commerce. People's networking, banking, shopping, and payment habits have all changed as a result of the widespread use of portable mobile devices such as smart phones and tablets. As organizations take advantage of emerging digital capabilities, key advancements such as enhanced automation and productivity have taken place. The m-payment system is an essential element of m-commerce functioning, as it makes an m-commerce transaction feasible by managing the exchange of monetary values of mobile transactions. De Bel and Gâza (2011) define m-payment as a transfer of funds in exchange for a product or service where both the initiation and authorization of the payment includes the use of a mobile device.
Brasen (2015) defines a mobile device as a computing device, designed mainly for portability. Therefore, devices such as cell phones, smartphones, laptops, notebooks, tablets, palmtops, and e-readers are all examples of the mobile devices as except size variations, they all are portable. According to International Telecommunications Union (2013), mobile payments include Mobile wallets, card-based payments, carrier billing, contactless payments NFC (Near Field Communication), direct transfers between payer and payee bank accounts (Intra/inter-bank transfers). Therefore, banks can also be a part of mobile payment systems.
The ever-increasing use of mobile devices along with the growth of m-commerce has led to the increased customer expectations for faster, and more efficient payment methods. Before the advent of smart devices, online transactions were limited by location—you could only shop from a desktop computer with an Internet connection. Mobile payments, instead operate on the go, using wireless networks and allow customers to shop, and make payments from anywhere. Furthermore, once an app is downloaded, it can be used offline also, and occupies far less time to open than a website. According to a survey from the World Advertising Research Center, nearly 72.6% of internet users worldwide, will access the web solely through their smartphones by the year 2025. Not only are today's digital customers looking for faster, more reliable payment solutions on their mobile devices, but they've also shown a willingness to pursue, and advocate brands that offer seamless payment experiences. Mobile payments are equipped to address these prevailing needs of customers, and therefore depict the future of online commerce.
M-payment systems can be offered by multiple entities such as mobile service providers, banks, wallet companies, and e-commerce / tech firms. Mobile service providers (MSPs) include the telecom companies offering wireless internet services to the mobile device users. Both a Wi-Fi hotspot and an MSP essentially enable users of mobile devices to access the internet wirelessly. However, the range of a Wi-Fi hotspot is limited to the range of its router, which is a small area. MSPs use cellular networks, to provide on-the-go mobile data plans, and cover a large area such as a city, state, or country. Despite the enormous potential of mobile payments, cash usage has been robust to the budding range of options, even though transactional use is diminishing. Worldwide, cash in circulation (CIC) has amplified from 4% to 7% annually over the last five years, despite regulators’ backing towards non-cash transactions (World Payments Report, 2019). A recent report showing mobile payment adoption by country indicates that the adoption of mobile payments has been uneven across the world. For example, in some developing nations, where credit cards are not commonly available and many people don't have bank accounts, mobile payment has been prevalent. Mobile payment adoption in developed nations also reveals different patterns. According to the report, the adoption rate of m-payment has been very high in countries like China, Denmark, India, South Korea, and Sweden. It is higher to moderate in countries like the US, UK, Canada, Australia, Japan, Italy, Switzerland, Norway, and the Netherlands and very slow in countries like Germany and Mexico (MerchantSavvy.co.uk, 2020).