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Mobile Payments - the evolving dynamics of the retail market

With new payment gateways and the steep increase in the number of consumers using mobile phones for shopping and the alternative of mobile shopping is growing to become the latest buzz word in e-commerce and retail. The space for electronic retailing has grown by leaps and bounds and has witnessed dramatic changes in the last decade. The mobile payment being the next big thing and paving way for future retail transactions is going to modify the relationship between customers and retailers. The concept of mobile wallet is growing and gaining traction in the retail market. The mobile wallet is generally an alternative way of making payments which otherwise is done by giving cash, check, or by debit/credit cards. The smartphone using generation of consumers can make payments either by accessing accounts from which funds can be transferred or by holding payment credentials.
There are many existing models being used in the segment of mobile wallets in the apparel and garment retailing industry. The Short Message Service (SMS) was used to interchange text messages to make payments. However, such a service was more popular than digital goods like ringtones, avatars, and games. There was no security or encryption and no inherent evidence or confirmation of receipt, payment, or delivery.

This was followed by the Unstructured Supplementary Data Services (USSD) technology, an information transmitting mechanism using a GSM network. Since it used real time connections for payment sessions, the service was fast. It was mainly used to carry out bill payment and remittances. But for the apparel retail context the mobile wallet model to be used is the contactless mode of payment. Payment for garments can be made in-store by using a contactless technology by holding the smartphone in near proximity to the retailer's Point of Sale terminal. The credentials of customer accounts or tokens are saved in the smartphone.