Mobile Payments In The United States

In recent months, leading payment organizations have introduced mobile payment offerings to the market. One offering, from PayPal, joins a small but growing market of SMS payment providers. The other offering, from MasterCard and Visa, expands the contactless network to an NFC platform embedded into a mobile phone. Which technology is better positioned for success?

"It's an interesting question," offers Mike Friedman, Director of Mercator Advisory Group's Emerging Technologies Practice and author of this report, "because the two platforms are not mutually exclusive. Both offer tangible benefits to merchants and consumers, and both, in many ways, face the same hurdles to implementation and customer adoption."

Mobile Payments In The United States examines the two most relevant mobile payment technologies, NFC and SMS, in the United States market. Using the recent activity as a guide, the report discusses the mobile payment platforms being offered by companies including MasterCard, MobileLime, TextPayMe, PayPal, and Visa. Individual offerings are evaluated with an eye toward market strategy and the potential hurdles each product will face.

The report also examines the potential for mobile payment adoption in the United States. Consumer adoption will require a balanced provision of convenience and flexibility against security and privacy concerns. In addition the viability of carrier dependent business models is probed. The roles carriers and payment networks will take in a mobile payments world continues to be debated among market participants, and it is critical that these questions be adequately resolved.

Highlights of this report include:

• Mobile payments refer to payments initiated with a mobile (cell) phone for the purchase of physical goods and services.
• Two fundamentally different mobile payment methods, SMS and NFC have entered the market – each with its own value proposition.
• SMS payments are being offered by PayPal and emerging mobile payment companies. NFC payments are being supported by the payment associations, Visa and MasterCard. In both cases, key market offerings are discussed.
• Mobile payment adoption is discussed with respect to the factors that will contribute to the success of mobile payments including convenience, security , privacy, and the creation of viable business partnerships
• Mobile payment technologies other than SMS and NFC are examined with regards to their adoption potential.