Being the handiest of all devices today, investors are making a lot of smartphone-centric investments in order to position themselves in this booming trend. People can leave behind their laptop and netbooks, but never their mobile devices. It has become a more popular way of accessing the internet, since you can pretty much take the fun with you, no matter where you go. The result is a need for extensive economic development around this trend, incorporating mobile payments into every corner of the smartphone environment.
If the joint effort of AT&T, T-Mobile and Verizon to develop a mobile wallet network called Isis ever comes to materialize, it could one of the biggest moves we will see in the industry, and it certainly is game changing. We’ve already seen Google, Sprint, Starbucks and Apple work on mobile payments, as well as witnessed Microsoft partner with Verifone for Near Field Technology to work with its Windows mobile devices for the same purpose. The move these companies made, and are about to make, clearly stands head to head with credit card mammoths like Visa and Mastercard, an attempt which the two credit card giants will strongly oppose or significantly delay.
“It’ll be a long road for [Isis],” says Mario Moffitt, a cell phone industry watcher with Hudson. “It’ll only work if retailers are willing to except payment through Isis along with traditional credit cards. For Isis to succeed, they’ll need more than just Starbucks. They’ll need everyone including Best Buy, Wal-Mart and Amazon. Those are big obstacles and that doesn’t look good for investors.”
Even Mastercard mobile CEO Ajay Banga believes that there aren’t not enough electronic terminals for these retailers to accept contactless payments. “There are two angles to this. One angle is in the emerging markets, given the current absence of terminals that would accept something to do with a mobile phone, I’m not sure that the mobile payment ecosystem in those markets will develop the same way as it might in a somewhat more advantaged country that has better terminalization in place,” says Bangay.
Another thing that will delay the implementation is the behind-the-scene battle of companies to get a chunk of the profit every time users swipe their cards which amounts to tens of billions of dollars every year in the US alone.
“It all comes down to who gets paid and who makes money,” said Drew Sievers, chief executive of mFoundry, which makes mobile payment software for merchants and banks. “You have banks competing with carriers competing with Apple and Google, and it’s pretty much a goat rodeo until someone sorts it out.”
But it’s not like this impediment is going to stop the mobile trend from going mainstream, gaining massive encouragement from the financial side, as well as consumers. Visa is already looking into capitalizing on Square, a mobile payments start-up that turns phones and iPads into credit-card readers. Google was reported to team up with Mastercard and Citigroup Inc. to embed a technology on Android mobile devices, as well as Verifone Systems Inc., accepting payments from devices with Google’s NFC technology.
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