Mobile Payment Systems Arriving–Ready or Not?

Michael Brush’s 2012-12-28 article, “The next big battle for your wallet,” caught my eye on this morning’s MSN Money page.

There are a number of converging factors that suggest 2013 will see a flurry of mobile payment offerings supported by merchants of all kinds.  Without going into the parameters of the battle, some interesting technology issues will matter:

  • Use of near-field communication (NFC) in mobile wallets will depend on technology-ready smartphones and may be a factor for consumers anticipating an upgrade in 2013-2014.
  • There is a round of seller terminal upgrades coming along to satisfy Europay, Mastercard, and Visa security-system requirements by 2015.  The shift to mobile wallets could accompany that upgrade cycle.
  • The emergence of competing smartphone applications will raise new security and safety concerns.  Reputation and availability of wallets may be a factor in the choice of phone upgrades.  Consumer confidence in the security of the platform may be a greater consideration.
  • Users of mobile payment systems may have multiple wallets or single wallets that accommodate multiple mobile payment arrangements.  This matters with regard to the fee structure between sellers and the systems.  There will be many factors to consider, including where funds have to be available to be usable in a given wallet, the fees that a consumer experiences, etc.   Part of the competitive offering of these services will involve removal of friction and complexity and also the preferences of merchants for particular wallet systems.   The ability of sellers to make targeted offers to customers is a critical factor.
  • Identity for personal and inter-personal transfers seems to be at the current lowest-common denominator: verified e-mail addresses and verified mobile-phone numbers with PINs, user names and passwords.  There’s going to be some turmoil here.
  • From an user (and developer) perspective, it appears that we’re looking toward the wild-West stage at this point, and it is unclear how it will stabilize.  Meanwhile, eyes are on Google, eBay PayPal, LevelUp, credit-card services, and major retail chains such as Wal-Mart. 

I did not know about American Express Serve until I read this article.  I know banks such as Chase are providing mobile applications.  It is interesting to me that those two and others are not picking winners, each providing apps for at least three smartphone-platform contenders.  PayPal is also interesting from the standpoint of its on-line ubiquity.

I am going to be experimenting using some Apps available for Windows Phone.  I don’t expect to be doing much beyond observing the evolution of features and assessing usability.  I’m curious about security arrangements and protection of the smartphone.  I’m not familiar enough with the underlying platforms to be able to formulate an independent analysis though.

First impression: We’re in very early-adopter stage at this point.

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