Square. Here. GoPayment. SpotPay. Groupon Payments. Payware Mobile. Shuttle. Mobuyle. Mobile Pay on Demand.

And many, many more.

The list of mobile card readers seems endless today, but it's set to get a lot bigger.

The trend shows consumers are ready for mobile payments, says Aleia Van Dyke, payments analyst at Javelin Strategy and Research. (See related article on page XX.)

"Using a phone as a mobile terminal is a really good stepping stone to get consumers to use real mobile payments," Van Dyke says. "It's getting the consumer to think about their phone as more than just something to talk on."

It may still be some time before most consumers cut up their plastic cards in favor of using full virtual wallets, but today it seems clear they are ready to use phones for at least some aspect of their payments, she says.

Consumers also use mobile devices for online purchases. Total mobile online retail payments hit $20.3 billion in the U.S. or 6% of total online retail market, says Van Dyke.

Companies like Target, Finish Line and Costco are incorporating mobile phones into the checkout process, a move that will play heavily into sales this holiday season, Van Dyke says.

Mobile card readers can benefit small merchants that don't want to install conventional payment terminals or deal with paper receipts.

"This is an easy way for merchants to expand the payment methods they accept," Van Dyke says.

Last month, Square announced it has handled $10 billion in payments through its mobile-pay system annually. This number does not include the payments it handles for Starbucks, which accepts Square's mobile wallet at 7,000 stores.

Square might see some competition from Groupon, says Aaron McPherson, practice director for payments and security at IDC Financial Insights.

Groupon, which recently introduced a mobile card reader of its own, aims to keep its transaction fees low by relying on its existing sales system rather than an independent sales organization.

Square and PayPal also offer systems that let merchants detect when registered shoppers enter their stores. The apps can even transmit users' photos to merchants.

"It goes back to the days where the shopkeepers knew you by name," says Deborah Baxley, retail sales expert and principal at Capgemini.

Such a system is suited more for coffee shops — it may not scale well for a large retailer such as Wal-Mart, she says.

Even with such potential issues on the horizon, mobile payments will continue to grow, Van Dyke says.

"Of course, payment acceptance using a mobile card reader should not to be confused with payments made through the mobile device," Van Dyke says. "But mobile acceptance is an excellent stepping stone to broader use of the mobile device for payments purposes."

But McPherson says the market might suffer from overcrowding.

"Too many people are trying to sell mobile card readers now," he says. "Next year there's going to be blood in the water; it'll be a blood bath of all these people competing."


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