On a panel of mobile payment providers at GigaOM’s Mobilize 2010, everyone was happy to agree that mobile payments are finally getting their day in the sun due to the growth of smartphones, mobile application platforms, and the sheer market size of 5 billion phones.
What panelists disagreed upon was how to do it, and who would win. One key tension was around near-field communication, or NFC, the use of short-range wireless to exchange data that has never really gained traction. Geoff Iddison, who leads e-commerce and mobile for MasterCard, is a huge NFC proponent — which is kind of counterintuitive, considering NFC would replace physical credit cards. Iddison pointed to Nokia’s inclusion of NFC in all its phones, indications that Apple and Google are getting in on the game, and reports from NFC manufacturers that they have a backlog of orders. MasterCard has been actively working on NFC standards, he said, adding that mainstream use of the technology should happen within six to nine months. The benefit of NFC will be bringing dynamic redemption of coupons and security to the point of sale, things that credit cards can’t do, Iddison said.
Tapping a phone at the point of sale to pay for something is hardly more convenient than swiping a credit card, said Osama Bedier, the VP of platform, mobile and new ventures for PayPal. While NFC might be useful for things like checking into a social service a la Foursquare, one of the big benefits of mobile payments is getting around the physical point-of-sale transaction bottleneck, he said. So PayPal is working on ways to make money digital like allowing customers to deposit a check by taking a picture of it, bypassing banks.
Zong CEO David Marcus is also ambivalent about NFC, saying it’s already a good experience to buy a cup of coffee at Starbucks with a credit card. The opportunity is to innovate around customer relationship management, offers and other functions associated with payments, he said. Zong primarily offers mobile payments for virtual goods, but Marcus sees that as a sort of gateway drug to familiarize users with the mobile payment function online and then move that to the offline world.
Boku co-founder Ron Hirson nailed down a few actual predictions for when this all will happen. Remote mobile payments will grow this year. Next year, the competitive landscape will become clear with AT&T, T-Mobile, Discover and others’ “Project Mercury” mobile payments joint venture. And in 2012, he believes the market will consolidate. Borrowing the company names of the panelists on either side of him, Hirson proposed the combined entity might be called “MasterPaloku.”
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