Summary
This article greatly underestimates 3 key factors in the adoption of a mobile payment market
1. The expense of consumer education and trust. It will cost an enormous amount of money to get this market not only interested, but educated on the experience
2. Not all technology is created equally. I don't see a trend in here that suggests any of these pilot programs are gauging what the consumer would demand from the experience - just that it's cool and has potential interest. That's a long way from profitable.
3. Merchants will have the final word here. And if they are smart, before they adopt something as useless as paypass (and spend good money on it), they will grind their solicitors on the development and training costs. If I was running McDonald's first thing I'd ask AT&T or Visa to do is pay for all of the new equipment and training I'd need to use the phone.
Also, there are many technologies not addressed in this article. For example, www.RBAintl.com , has some amazing patented tech that seems safer and more user friendly to me. Given RBA's partnership with a loyalty marketing solution like The Loyalty Source, they could package a much more profitable (to wireless carriers) program that's much more user friendly.
Analysis
Having pitched tech in this space to carriers, there are a lot of issues here the article does not address. How do you educate consumers on how to use a phone to pay? How do you get consumers to trust that the dollar amounts they read on their phone are true? Who burden's the cost to do so?
Furthermore, this is a chat room tech, meaning the toughest sell here is how to make it practical. It sounds great. What if I could tell you that you could use your cellphone at an ATM to withdraw cash? How about swipe your phone with a bar code reader to pay at a store? Sounds cool, right? Well the tech is there, it's been there.
It's not a practical solution as the author suggests, however. Where is the fraud protection? Who burden's that cost? Also who licenses/owns the tech, the carrier or a bank? What's the profit model to the carrier, the handset manufacturer? Shouldn't the carrier skip the bank and be it's own banking solution? The tech is there to protect them and revenue would be transactional. But the financial burden to educate a slow to adopt US tech market seems a huge hurdle.
Furthermore, a merchant doesn't need another payment solution that doesn't work. I've yet to see a single non swipe credit card transaction occur. Why would merchants pay to develop another payment method before the demand was big enough?
There is no consumer demand for this tech; because no one knows it exists. I think we are a long way from a safe and functional "phone wallet"
