For years mobile payments has been, if not the next big thing, at least in the top five next big things in the US. It has always been delayed by the old mobile bugbear, fragmentation (or, as some people like to call it, “competition”). The New York Times has a piece detailing the difficulties faced in fitting the technology to a business case: “For such payments to work here, cellphone manufacturers, carriers, financial institutions and retailers must all play roles. There also must be some sort of intermediary that is trusted by both the financial institutions and the carriers to activate the virtual credit cards inside the phone…One problem is that anyone using a credit card inside a cellphone is simultaneously a customer of the financial institution and of the carrier.”

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In Japan DoCoMo (NYSE: DCM) had more than 50 percent of the mobile market when the technology was rolled out, so it really called the shots. However, it’s likely to be worked out at some point because everyone benefits, from credit card companies to carriers to retailers to customers. As far as I can tell the main problem is the point-of-sale devices, which will be the most expensive part to roll out, and while it’s quite reasonable for a handset or application to serve only a few percent of the population, a POS reader needs to be able to serve the majority of people. Perhaps the best opportunity will be the usual POS suspects like Mastercard and Visa… Mastercard is already underway with this, selling a system to banks which they can then sell to their customers—but the customer has to have a handset with an NFC (near field communications) chip and a data service, so the whole thing will go a lot smoother with carriers on board.

Photo Credit: Ultrasum