There are two kinds of mobile payment – remote mobile payment and proximity mobile payment.
Remote mobile payment occurs when the retailer is remote to you and you purchase goods via SMS text message or mobile website with your mobile device.
Proximity mobile payment is when you pay for goods and services with your mobile phone at a physical point-of-sale (POS) terminal. This method of payments is initiated from a mobile phone that uses Near Field Communication (NFC) technology. Instead of using a traditional credit or debit card (with a magnetic stripe on the back of it), you bring the cell phone close to the POS terminal (less than four inches) to make the payment without swiping or touching anything.
See also, “How does proximity mobile payment work?”