Over the last few years, the payment systems used in business activities have been altered by recent technological developments. Increasingly, more consumers use their mobile phones to do their purchases. Currently, sales through smartphones are an indicator of the growth potential that these new trade and payment methods have in the future society. In this chapter, the authors carry out a theoretical review of the different payment systems, from the most traditional ones to the new payment systems used on the Internet. They also analyze the different security protocols that are currently operational, with the aim of improving consumers' trust. In this literature review, the authors extract a few implications and recommendations to management of M-Payment-based businesses.
TopIntroduction: New Payment Means In The B2c Commerce
The new payment systems are a result of the Information and Communication Technologies (ICT) developments in the field of economic transactions between companies and their customers. More specifically, they emerged as a means to solve certain problems related to cash handling (Tamayo, 1999): 1) the need to reduce the cost of money and of the existing payment systems; 2) make small purchases and instant payments more flexible; 3) increase security and protection against fraud and other types of crime; and 4) the emergence of online payments and the electronic commerce on the Internet.
According to the last European Central Bank report (2011) concerning the number and types of transactions in the Eurozone in 2011, 35.47% of all payment transactions were carried out through payment systems related to bank cards, 28.93% were direct debits and 27.06% were performed through bank transfers. The distribution of the payment systems employed is very different depending on to the country of reference, as shown in Table 1.
For instance, almost 50% of all the transactions performed in Germany are direct debits; 70% of the transactions are made with bank cards in the case of Portugal and over 80% through electronic payments in Luxembourg. In Spain, the main payment tool is the bank card (43.11), followed by direct debits (39.94%) and bank transfers (14.67%). Payments with checks and the rest of payment systems have no relevant significance.
Table 1. Structure of payment transactions in the Eurozone in 2011
One of the most relevant aspects in the development of the electronic commerce is the payment system employed to complete the economic transactions. As shown in Table 2 and according to the B2C Electronic Commerce Report1 published by the National Observatory of the Telecommunications and Information Society (ONTSI, 2011), the main payment tool for purchases made on the Internet in Spain is the bank card (64.6%), followed far behind by payment on delivery and bank transfer (13.6% and 9.2%, respectively).
Table 2. Payment systems used in online purchases (%): Comparative study 2006-2010
Source: ONTSI (2011)
The electronic or online payment systems have experienced an important increase, but they have not reached initial expectations (Prabhaker 2000; Ropers, 2001; Anil et al., 2003; Liang and Wei, 2004), mainly because of the concerns related to consumers' trust (Sorkin, 2001), the complexity of the systems, the privacy of the information (Hwang et al., 2003) and the lack of security (Behrens, 2001), among other reasons. In spite of all these issues, since 2003 the average spending per buyer on the Internet has increased by 89%, reaching an annual average of 831 euros per Internet user in 2010 (ONTSI, 2011), which is a recovery in comparison with the scarce decrease in 2009 (see Figure 1).
Figure 1. Annual average spending in euros on Internet purchases: Comparative study 2003-2009