The last payment type in the above list accounts for the bulk of mobile payments and I would like to examine it a bit closer in this article. Specifically, I will review the various technologies that make it possible, as well as the funding options available to users. Let’s get started.

At this point I doubt that there is anyone who has not heard of NFC. Some of you may also have heard of RFID and 2D and perhaps even of WAP. I know that we have used all of these abbreviations on this blog on many occasions. But I think we can all benefit from taking a step back for a moment and going over each of these technologies in a bit more detail.

1. Near-field communications (NFC) is a short-range, high-frequency technology that enables exchange of information between enabled devices at a distance of up to four inches. NFC is used primarily for facilitating mobile payments at physical checkouts, where a mobile phone containing a NFC chip transmits data to a NFC-enabled POS terminal. So rather than swipe her card to complete a payment, the user waves her phone by the POS machine. NFC can also be used for facilitating person-to-person (P2P) payments, where the information is exchanged between two mobile phones.

NFC is the technology behind Google Wallet, Isis and all other digital wallets that are now competing for supremacy.

2. Radio frequency identification (RFID) is similar to NFC in that it uses radio waves to communicate transaction information, but it enables data exchange at longer distances (up to several yards). Similarly to NFC, it requires that a RFID chip (or tag) is embedded onto the user’s phone and can be used for both payments at brick-and-mortar checkouts and P2P transactions. RFID’s longer operational range makes it more vulnerable to unauthorized readings of personal account information than NFC.

RFID has been widely used in various mobile payments applications in Japan and South Korea for years.

3. 2D barcode (or 2D code) is a two-dimensional way of representing information, which allows for a barcode to store more data than is possible with a traditional one-dimensional representation. This technology enables fast access to the information. It works by displaying a 2D barcode on the consumer’s mobile phone, which contains her payment account information that is then scanned at the checkout by the merchant’s POS device. The user’s account is linked to a payment account, to which the transaction amount is automatically charged.

2D barcode technology has been used with great success by Starbucks in the U.S. Consumers who sign up for a mobile payment account with the coffee chain get a prepaid card, which is used for funding the transactions.

4. Wireless Application Protocol (WAP) is a technology for transmitting information over a mobile wireless network. It is used to enable consumers to access the internet from their mobile phones. Making payments through a WAP browser on your mobile phone is very similar to doing it through a browser on your laptop. You would log into the payment provider’s website directly through your mobile browser or through an application and complete the payment. Applications can also be used for making POS payments.