Why Mobile Payments Might Still Be A Few Years Away In A Few Years

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Why Mobile Payments Might Still Be A Few Years Away In A Few Years

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Are mobile payments the new speech recognition technologies? One of the bigger stories in mobile this year has been the growing investment and hype behind the idea of using one’s mobile phone as a method of payment, but it’s pretty clear that the details of how any one company or organization will build a mobile-payments system are still very much up in the air.

Computer scientists have been promising that reliable speech-recognition software is just a few years away for decades, and while progress has been made even the best software leaves a lot to be desired. Similar promises are being made these days around mobile payments, and a sizable number of people and companies believe that the smartphone can be a natural evolution of the credit card in just a few years.

“There has never been a more exciting time in payments,” said Dave Talach, vice president of global product management at Verifone, echoing during a panel discussion at GigaOm Mobilize what many in the payments industry have been saying alongside the launch of products like Google Wallet.

But it’s not going to happen this year, and it’s not going to happen next year, Talach and his fellow panelists agreed. It may not even happen the year after that, as extensive field trials have to be conducted to make sure phones with NFC (near-field communications) technology work properly with merchant terminals and back-end payment-processing systems before any of this can hit the mainstream. Oh, and somebody needs to convince the average consumer why paying with their phone is easier, safer or more rewarding than pulling out cash or a credit card.

Mobile payment backers like Google (NSDQ: GOOG) like to point to the use of NFC technology in lots of places already, such as gas stations and restaurants. But those strategies have actually been a disaster, according to Laura Chambers, senior director of PayPal Mobile.

“Merchants have been burnt by NFC,” she said, referring to the cost required to build out payment infrastructure to support credit cards with NFC, which are used in “less than 1 percent of transactions.” Such cards are used more widely in Europe and Asia, but have yet to really catch on in the U.S.

Square’s Keith Rabois, chief operating officer of a company that makes a mobile credit-card reader and iPhone application, unsurprisingly agrees with Chambers’ view.

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By Tom Krazit