In Pictures: Mobile Payments 101

(Image: Fotolia)

The Phone is Optional The Phone is Optional

For some systems, such as PayPal's, the digital wallet can be managed from the phone but a handset is not actually necessary for completing a payment. The advantage of PayPal's cloud-based approach is it does not require consumers to have a specific type of phone. (Image: Bloomberg News)

The Phone is Integral The Phone is Integral

Other approaches, such as the Isis or Google wallets, rely on a Near Field Communication chip to turn the phone into a contactless card. This potentially makes the payment easier. It also allows the wallet to be compatible with new payment standards, such as EMV.

Hardware Upgrades Hardware Upgrades

NFC payment systems don't always require a phone have the chip built-in. Several companies sell memory cards or phone cases that add the chip to a phone that was built without one. (Image: Fotolia)

Behind Bars Behind Bars

Some mobile-pay systems make use of the phone's screen to display bar codes and quick-response (QR) codes to be scanned at the point of sale. Apple's Passbook system takes this a step further by letting users display payment-card bar codes while the phone is locked. (Image: Fotolia)

The Payment is Optional The Payment is Optional

Apple's Passbook and Lemon's wallet app both rely on other companies to provide the payment card. Their approach emphasizes the wallet metaphor, allowing easy access to any payment method the user adds. (Image: Bloomberg News)

A Twist for Prepaid A Twist for Prepaid

Prepaid card sellers have their own definition of mobile wallets. Whereas mobile-pay systems for bank customers are designed to make it easier to spend money, mobile-pay systems for prepaid card users, many of which are unbanked, are more focused on ways to load funds. (Image: Shutterstock)

Money Matters Money Matters

The most sophisticated mobile wallets, such as those based on NFC chips, require merchants to invest in special readers at the point of sale. Isis, Google and others offset this cost with “offer” systems meant to guarantee higher sales. (Image: Fotolia)

Speed Matters Speed Matters

Mobile is ultimately competing with cash — a fast, simple payment method everyone understands. Despite the options mobile account-management can add, such as password-protection and funding from linked accounts, the payment process itself is almost always designed to be lightning-fast. (Image: Fotolia)

Scale is a Big Deal Scale is a Big Deal

If mobile payment startups underestimate one thing, it is likely to be the effort and money it takes to establish a payments system with scale. For this reason mobile-pay companies form alliances with payments-industry insiders, such as PayPal's pact with Discover to dramatically increase acceptance of its digital wallet. (Image: Fotolia)

Conflict is a Big Deal Conflict is a Big Deal

The mobile-pay stakeholders don't always play nice. Notably, Verizon Wireless, one of the companies behind the Isis wallet, has resisted putting Google Wallet on phones that use its network. This has led to absurd situations such Google being unable to support its mobile wallet on phones built by its own Motorola Mobility unit. (Image: Fotolia)

There is no single definition of a “mobile wallet.” Each product differs vastly in its choice of technology, audience and the basic type of payment upon which it was built — but most fit into a few simple categories.