“In the past few thousand years, the way we pay has changed just three times – from coins, to paper money, to plastic cards. Now we’re on the brink of the next big shift.” (Google)
Mobile payment has been in the talks for quite a while now. It seems that tangible solutions and actual projects are finally within reach. Internet giant Google will soon start its mobile payment system called “Google Wallet”, which is an Android based app turning every smartphone into a virtual wallet. Apart from bank and credit card functions, the app is also linked to membership cards and discount coupons via Google Offers. Google Wallet is only available on the US market for now and services are limited to just a small number of partners. Behind the scenes the system uses “Near Field Communication” (NFC) technology. NFC-ready mobile devices just need to be swiped like an access card across a special reading device. The money will be drawn from a credit card or a bank account the customer has linked the mobile app to. What sounds quite easy actually requires a lot of coordination efforts between different partners: Mobile device manufacturers, telecommunications provider, banks, retailers, and developers of the mobile payment application.
This is where the problems start. There is enough room for doubt that all the involved parties will agree to one single standard for a mobile payment system. At the moment, almost all of the who-is-who companies from the financial, digital and mobile markets are working on similar mobile payment services. PayPal, the biggest provider for online payment methods, will surely work on a mobile payment system. Credit card companies like Visa and MasterCard are already offering their own mobile payment services via “payWave” and “PayPass”. Customers need to swipe their credit cards across special reading devices and the transaction will be completed within seconds. If the credit card is replaced by NFC-ready smartphones, then banks and credit card companies will emerge as new players on the contested mobile payment market. Of course, the said companies are already working on their first pilot projects to deliver workable solutions in the near future.
Telecommunication providers and manufacturers surely do want to have a say on the mobile payment market, too. The three largest mobile providers in the US, AT&T Mobility, T-Mobile and Verizon Wireless, are cooperating as a “mobile commerce network” under the name “ISIS”. Telecommunications provider Ericsson has recently launched its “Ericsson Money Services”, which is planned to serve as another payment option for customers on their shopping run. Last but not least, Apple is also an important player on the market. The company is in everybody’s mouth, but much of it is just speculation about upcoming projects. Rumor has it, that the new iPhone 5 is supposed to be NFC-ready and that Cupertino is working on its own, separate payment system. At the moment, Apple does have a sound customer base and anything is possible.
In the end, the mobile payment market constitutes a multi-billion Dollar market. The sheer number of competitors, who each work on their own payment solutions, only underscores how much competition this market is facing. Banks, telecommunication companies, Internet giants – all of them have the potential to become a real power on this market. The crucial point is to establish a nationwide network of partners to be the first to reach a viable number of customers.
Since Google is the first player to present a viable solution with its “Google Wallet” service and its Android mobile OS is already forecast to become the market leader, it is well possible that Google will be the big winner in the competition for mobile payment systems. However, we should not underestimate trusted institutions like banks and established players like PayPal. Only future can tell who will be the player that is able to permanently change our leather wallet into a virtual one.