Editor's Note.

Aside from all the talk about mergers and consolidation in the making at the Electronic Transactions Association Annual Meeting and Expo earlier this year, the next most talked about topic was mobile payments.

The industry is abuzz over the emergence of mobile payments initiated by consumers and mobile merchants' ability to accept them.

Metaphors describing the state of mobile payments depict the market as the "Wild West" or a "gold rush." These simple clichés sound about right. But as with any cliché, there is more going on.

On the consumer side, there is much prognostication about the possibility of the mobile phone one day replacing the standard payment card. But how that could happen and when are unknown. With seemingly scores of products enabling mobile phone-initiated payments, consumers are left with many options.

Merchants, too, have choices. Traditional point-of-sale terminal makers long have sold wireless POS devices, and some now also offer mobile phone-based payment terminals. Payment gateways have something for mobile merchants, too.

How is a merchant to choose?

Then there are startup companies from outside the payments industry that promise a new experience for the merchant and consumer, such as Square Inc., but they have yet to share many details regarding how what they offer will differ from what already exists in the market.

No clear direction has emerged for anyone, except for ISOs and acquirers. They have a vivid view of the mobile market: It's a new opportunity to earn revenue.

Some ISOs already have begun to sell the latest mobile-payment products in hopes their early adoption will give them expertise in selling the service to merchants, especially those that do not accept credit and debit cards already.

That is the "gold" the payments industry really wants to capture and why mobile payments has generated so much attention. Mobile payments can mean new revenue and new merchant clients.

But how do ISOs and acquirers find these merchants and ensure the mobile products they offer are the right ones?

Speculation abounds, too, over how many mobile merchants exist. As reported in this issue, the size of the market may range from 2 million to 20 million, depending on whom you ask.

But the greater question for an ISO or an acquirer to answer is, how many of these merchants will pay for my products?

From the May/June 2010 issue of ISO&Agent magazine.

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