PARIS–Several mobile-payment system trials next year will expand, potentially moving into commercial availability. But the relatively small pool of merchants equipped to accept the payments could limit consumer use of the services, experts said here this week at the Cartes & Identification conference.

Retailers that already have terminals that accept contactless payment will be compatible with many of the systems being tested in the U.S., though the number of such merchants is small.

For example, some 83 million cards worldwide are equipped to support MasterCard Worldwide’s PayPass contactless service, which enables cardholders to tap their payment cards instead of swiping them at the point of sale, according to James Anderson, MasterCard vice president of mobile. However, only about 265,000 merchant locations worldwide can accept its contactless cards, he said.

“We push on both sides of the market,” Anderson said during a Dec. 9 panel discussion. “We’re always looking for increased terminalization and also increased [contactless card] issuance.”

Selling consumers on mobile payments is only one of several steps needed to advance the technology, analysts have said. Merchant participation also is needed to drive adoption.

MasterCard and Visa executives have said setting up retailers with readers that can handle contactless cards and contactless payment stickers is one a way to prime the market.

“We made a conscious decision to start with cards in order to drive the terminal deployments,” Anderson said. “We think there’s a whole education experience the consumer has to go through before they get to paying with their phone with [the technology] embedded in their phone.”

PayPass transactions comply with the same ISO 14445 standard as the contactless offerings of other major card brands, such as Visa Inc.’s payWave. As such, most merchant that accept one brand’s contactless service can accept the other brands’ contactless offerings, too.

The major payment networks made a push to set up merchants with contactless readers several years ago, though mostly only large national retailers and some quick-service restaurant chains have deployed them.

Some retailers, such as Best Buy Co. Inc., even have disabled certain contactless card payments because they carry higher interchange rates. That, combined with little marketing by the banks that issue the payment networks’ cards, has resulted in slow adoption of the technology, observers say.

However, Anderson said, retailers are “very excited about mobile” payments, which is likely to prompt those that have resisted installing contactless terminals to do so.

Overall, Anderson and other panelists said they are confident that, based on recent developments, mobile payments, particularly those based on Near Field Communication technology, will gain traction next year.

In the U.S., Visa is testing a system with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and U.S. Bancorp using microSD memory cards consumers may insert into certain cell phones. Visa announced Dec. 7 it is making the service a standard feature for its partner banks (see story). 

MasterCard says it is planning to do a trial using similar technology with a large U.S. issuer in the first quarter of 2011 (see story). 

In November, AT&T Inc., T-Mobile USA and Verizon Wireless announced they are developing a mobile payments system called Isis that will route transactions over Discover Financial Services’ network. The system will rely on phones that are embedded with NFC chips (see story). 

Internationally, several countries, including France and Korea, have made progress on mobile-payments systems, moving into commercial availability in some markets.

“All of the different pieces of this giant jigsaw puzzle are finally” coming together, said Mung-Ki Woo, vice president of electronic payments and transactions at Orange, the wireless carrier that is part of France Telecom SA and offers mobile-payment services in several countries.

Getting banks on board, at least in the U.S., also is a challenge.

Banks, especially large ones, often are slow to deploy new technology because of the potential risks. “Taking a new technology and bringing it into the banking industry happens about every one or one-and-a-half decades,” Anderson said.

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