Despite some glitches that are hampering vigorous adoption, the companies targeting mobile payments are finding success in forging brand connections. The problem is their connections are with narrow constituencies, and are often based on competencies beyond mobile payments.

"They are all good solutions that are trying to expand from different starting points," says Zilvinas Bareisis, a senior analyst at Celent.

Consumers are connecting PayPal for its name recognition, whereas merchants are drawn to Google because they feel the search engine best fits their desired short-term mobile payment needs. Fifty-three percent of retailers said Google is most likely to win the mobile wallet war, far ahead of PayPal (25%) and a "new market entrant" (19%), according to a poll conducted by ACI Worldwide at the recent National Retail Federation conference.

Despite Google's lead, the company has a lot of work ahead of it.

"While Google has brand awareness and certainly can gain coverage in the mobile wallet category, the market is still uncertain as to who comes out on top," says Jeff Hale, senior vice president of retail payment for ACI Worldwide.

At the same time, new research from comScore tells a different story for consumers, who see PayPal as a dominant "payments brand."  Only 51% of consumers are aware of mobile wallets other than the one offered by PayPal.

"PayPal has great scale for the mobile market," Bareisis says. "People are already using mobile to buy stuff through a PayPal app. So people are already using their mobile phone to make payments through PayPal. And the partnership deal with Discover gives them traction to enter the point of sale environment."

About 72% of those polled by comScore were aware of PayPal's mobile wallet, with Google Wallet coming in at 41%, MasterCard PayPass 13%, Square Wallet 8%, Visa's at 8%, Isis at 6%, Lemon Wallet at 5% and LevelUp at 5%.

"Our study shows that current users of mobile wallets have a significantly different demographic profile compared to the digital wallet prospective users who do not yet use them, but claim they are likely to do so," says Andrea Jacobs, senior manager at comScore. "By nature, the technology early adopter may be more adventurous with their usage decisions, whereas the prospect may be a little more conservative and hold separate concerns, such as security. For that reason, I'd imagine that the more mainstream prospect may gravitate towards [an] already trusted brand."

Despite its rocky 2012, Google Wallet is in a good current position, particularly to lure merchants to mobile payments. It has already attracted Macy's, Bloomingdales, Foot Locker, Toys R Us and Old Navy.

"Google is lucky right now in the literal sense of the word," says Jim Van Dyke, founder and president of Javelin Strategy and Research. "Their core business model and ad-based search are all positioned for short-term success in mobile payments. The value proposition is being able to place coupons on mobile devices. And Google is all about merchant offers and locations and stuff like that. It's in an easy position to do location-based offers at a fairly low cost."

Google Wallet is also helped by the frosty relationships between banks and merchants stemming from other payments disputes, putting frustrated merchants in the mood for an alternative to accept mobile point of sale payments. 

"There's not a lot of love lost between retailers and banks," Van Dyke says.

The brand connections are fluid, and preferences may change as Near Field Communication mobile payments become more widely supported by handset makers, Bareisis says.

"Isis is an example here," he says. "It's very much focused on proximity NFC payments at the point of sale. That's a good promising technology, but there are still lots of issues with handsets [not having NFC capabilities] and a lack of point of sale terminals that accept NFC. It's working quite well [where tested], but to gain traction with national retailers will take some time. The EMV [chip-card] migration will help with that."

While NFC is still not widely available, the hosted "cloud" delivery models of PayPal and Google are better positioned for the short-term, Bareisis says. "The cloud-based model is easier to set up and manage for merchants," he says.

Isis, Google and PayPal would not provide executives for phone interviews.

Another mobile wallet provider is the Merchant Customer Exchange, which is backed by a number of large retailers such as Target and Wal-Mart. It aims to win over consumers by ensuring compatibility across a wide range of merchants.

"We want people to be able to, when the get up in the morning, to get coffee and gas at Shell and groceries at Target or Wal-Mart, shop at Best Buy and go to a restaurant, and pay the same way," says MCX spokesman Jeremy Mullman.

To accomplish that, the merchant-owned consortium is currently stressing Quick Response (QR) codes, based on the availability of the technology and its existing use by consumers to execute retail payments. "There's no smartphone that a bar code won't be compatible with," Mullman says. 

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