Wednesday, August 4, 2010

Wireless Carriers Cooperating On Mobile Payment But Others May Develop Competing Alternatives

A couple of weeks ago, I lost my wallet. I got it back almost immediately after I realized I lost it because someone was kind enough to turn it in to the supermarket's staff. Nothing was lost. What I didn't lose in the whole ordeal was my G1 and my keys. There was a ring around through which I looked my index finger through all the time I hold my keys in my finger.

And there was no way I was letting go of my G1. Nor wallet, anyway, it got lost.

So I was heartened yesterday to learn that ATT, Verizon Wireless, and T-Mobile USA were working on a payment system, specifically, a mobile payment system allowing users to use their phone or mobile device to pay for goods and services, replacing the current ways of how we make payments, credit/debit cards or cash.

Where are we on mobile payment?

So far, the trial is limited to Atlanta and three other cities (cool things like this never happen in my city first) and they are working with Discovery Financial Services in this endeavor. Of course, Bloomberg being a financial paper went beyond what this means for mobile warriors like us and delve into what this means for the credit card industry.

So, I'll focus on what this means for mobile users.

First it means I won't have lose my wallet much anymore. The reason was that I had just left the gym and headed to the market to find something to eat since most places were already closed. My shorts had no pocket and I didn't carry the whole fanny pack I used to store my gym ID, lock, keys, phone, etc. So I only took my wallet, G1, and keys.

So, once this system goes online, only my mobile and keys. Without the wallet, it's essentially one less thing to worry about. Basically, it means that almost anywhere I go, I can leave my license and other stuff that goes into my wallet in the car.

Merchants are going to like this a lot. The ease of use, which will be the key here, should make transactions go smoothly. I also see location-based services like Yelp and Foursquare get involved.

It will not be a simple payment system. Once matured, providers, merchants, and services will realized that by integrating this mobile payment system into their network, it will be easier for users to buy goods and services.

Furthermore, I also think there will be multiple competing mobile payment systems. Visa, Mastercard, American Express, Google Cash, and Paypal may also develop their own or work together to create apps that allow payments to be made through their financial networks. Google Bank, anyone?

And this greater competition may also allow the merchants to add multiple services without additional fees. In a wide-open and unrealized mobile payment market, merchants get to pick which services they choose based on incentives, special programs, or even exclusive deals.

Consider this, Android devices may eventually take 30% of the US smartphone market. Google Cash can play a major role in this as a separate entity and/or in cooperation with carriers. Apple with its 150 million iTunes account can also play a big role in this as well.

What may happen is we end up with five to ten different mobile payment systems. And which will mobile users choose? Well, does it matter? If all this is app-based, we only need to download the app. Don't think so? Mobile payment should be that easy.

Again, I can't wait for this to become mainstream. Japanese mobile users have had the ability to pay for things through their mobiles for years now. It's time we get to enjoy this convenience.

More at Bloomberg.

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