Card companies are betting that if they stimulate consumer demand for mobile payments, it will spur the phone networks and manufacturers to move faster on improving the technology.

First Data Corp. plans to begin selling its mobile payments "Go-Tags" on racks at a handful of retail chains around the country to drum up consumer interest. The company also has struck a deal with Visa Inc. to expand merchant acceptance of contactless stickers, which can be attached to mobile handsets for use at the point of sale. MasterCard Inc. has a similar alliance with Blaze Mobile Inc. of Alameda, Calif., which also makes contactless stickers.

All these companies view the stickers as a stopgap technology until near-field communications chips are incorporated into handsets. But Barry McCarthy, the president of product innovation at First Data's commercial services unit, says that if payment companies encourage consumers to use their phones as payment devices, they in turn will demand that network operators and handset manufacturers integrate the feature into the phones.

"We think we can kick-start this market," he says.

In a pair of internal trials, including one at the company cafeteria, First Data found that consumers were quick to accept the stickers as a more convenient form of payment, McCarthy said. Users of the tags visited the cafeteria 30 percent more often and spent ten percent more money per visit. What was most encouraging, he said, was that 96 percent of the workers preferred to use the tag exclusively, rather than a conventional card, he says.

The Go-Tags will be linked to a reloadable prepaid account and sold at merchants in package along with a conventional card. The company also plans to seek banks to act as issuers, says Michael D. Capellas, First Data's chief executive officer.

In other mobile payments news, MasterCard's Canada unit announced Thursday that it had completed a mobile payments trial with Citigroup Inc.'s Canadian cards unit and BCE Inc.'s Bell Mobility, the nation's largest telecom, using NFC-equipped handsets that they borrowed from Sprint. Scott Lapstra, vp of market development at MasterCard Canada, says the trial showed frequent usage by several hundred participants, with average transactions just under $20, indicating substitution for cash.

Visa announced last week the first commercial launch of its NFC point of sale payment technology on mobile phones - in Malaysia. Pam Zuercher, vp of product innovation at the Visa U.S.A. unit, said other markets will come along, but only when they reach the "tipping point" where it becomes practical.

The Malaysian rollout illustrates the complexity of using the handsets for payments. Visa teamed up with Maybank, one of Malaysia's largest financial institutions; Maxis Communications, the largest wireless carrier in the country; and the Finnish phone maker Nokia Corp. Because Malaysia uses the Europay, MasterCard, Visa security standard, which requires a chip and PIN for high-value purchases, the mobile transactions are limited to about $42, she said. Visa chose Malaysia for the initial rollout because the country is an early adopter of new payment technologies and has a fairly dense population of contactless merchant acceptance locations.

Fred Brothers, the managing partner of the technology consulting firm eCom Advisors in Dublin, Ohio, says the adoption by different demographic groups also could be broader than most bankers believe, not confined to younger consumers. eCom Advisors' research has found that adoption of online banking correlates to the sophistication of the handset, whatever the age of the user, he says. "We think it's causal. It's an enabling technology."


Steve Bills is deputy technology editor for American Banker.

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