Begun, the Mobile Payment Wars Have: Part II

ScreenHunter_08 Jan. 19 10.10

We’ve written a lot lately – here and in longer reports – on the importance of mobile payments. Standards have yet to emerge in the U.S. and there’s lots of experimentation. But once it hits full stride, it will enable lots of parallel areas of development in mobile.

This goes for both m-commerce as well as LBS and offline transactions. Users will benefit as a function of lower barriers to make (or accept) mobile payments, while advertisers and merchants benefit as a function of clearer ROI for their mobile presence (think check-in deals).

Today Starbucks pushed this segment forward both literally and symbolically, with its point of sale (POS) mobile payments system at 6,800 locations. Users can to swipe their phone screens under a POS barcode scanner to execute quick transactions.

This will happen through a declining balance, which is replenished with a credit card or PayPal (sort of like a FasTrack escrow account or similar toll transit systems). At the onset, it will also require the free Starbucks Card Mobile iPhone or BlackBerry app.

Like a lot of things, it’s starting with iPhone because its users represent an early adopter segment that will get it going and influence others. There might also be some demographic tie-ins to iPhone (and BlackBerry) users as high-end daily coffee drinkers.

But the main point here is that a company like Starbucks has the branding and physical (offline) saturation to get mobile payments on the map. That goes for consumer comfort levels, popularity, and the standards that will emerge for mobile transactions and acceptance.

On that note, there is lots of experimentation in this area, and everyone wants to own the standard. So far the state of the art has been tying mobile payments to carrier billing. But that applies more to m-commerce (vs. POS transactions), and involves exorbitant carrier markups.

Near field communication (NFC) is another standard, and one that will apply to POS transactions. The issue there is compatibility in both the phone and POS hardware. It will take a while, but Google is getting the ball rolling with NFC baked into Android’s Gingerbread release.

Again, once mobile payments hit full stride in terms of ease of use, common standards and user acceptance, the mobile media potential we keep talking about will really take off. Today we saw a big step in that direction.

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