Despite the heightened activity around mobile payments, there are still too many unresolved questions for the payment form to have mainstream success this year, one analyst contends.
The “mobile hype factor” will remain high with numerous pilots taking place, but “we don’t expect any real winners to emerge this year,” Tien-tsin Huang, an analyst with J.P. Morgan Securities, wrote in a March 25 research note on Visa Inc.
Both Visa and MasterCard Worldwide are in a good position to stake out their turf in new mobile-payments systems given the credit card networks’ expansive relationships with banks and merchants, Huang wrote. For mobile payments to take off, a system must be “interoperable” with the existing infrastructure, he said.
Visa and MasterCard already are working on pilots in the U.S. through a relationship with DeviceFidelity Inc., a technology company that is providing the networks’ issuing banks with memory cards their customers can insert into their mobiles to activate a payment function. Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and U.S. Bancorp have said they are working with Visa on pilots (
The major challenge hindering mobile payments is a lack of merchant terminals that can handle Near Field Communication payments, experts say. NFC chips allow devices to transmit information, such as payment data, between each other when they are a few inches apart. Of the 8 million U.S. merchants that accept Visa and MasterCard, fewer than 150,000 are “NFC ready,” Huang wrote, adding it would require an investment of at least $5 billion “for this payment form to take off.”
