Mobile Payments

There was a time when your mobile phone was just a phone. Now they are communication networks in the palm of your hand. Not only can you talk on them, but you can text message, surf the web, get directions on a GPS, check your email, listen to music, watch video, shoot your own video, take pictures, and so much more.

And now, they’re turning into credit cards.

M-Payments

M-Payments (or Mobile Payments) are point-of-sale payments made through a mobile device–cell phones, smart phones, PDA’s (Personal Digital Assistant).

With mobile payments, any person with a wireless device (such as a cell phone) can pay for a meal right at the table, or make in-store purchases without having to wait in line. In some places, mobile phones can be used to purchase anything that can be bought with a credit card, and more.

While many expected the world of M-Payments to enter the North American market a long time ago, it has been slow in coming. Predominant in Japan and Europe, North American manufacturers have been reluctant to accept the growing trend that the cell phone is fast becoming the one item consumers will not be without.

It’s Already Available

M-payments are already available in North America for online games and other online destinations. When you checkout, you simply select “mobile phone” as a pay option. Enter your cell phone number to receive a text message asking you to confirm the purchase. You reply with the word “yes” or more simply, the letter “y”. You then receive a text message confirming your order and you are done. The entire process takes seconds.

This is much faster than having to pay by credit card, where you have to enter all your personal information, your full address, phone number, and then are usually forced to register for the site with a username, password, and email. Often times you then have to open your email to confirm your account information and address, then return to the main site to finish processing your order. Depending on the speed and accuracy of your internet provider, this process can take minutes, to hours.

Sounds awesome! What’s the hold up?

In order to complete mobile payments in store, both the store (retailer) and the cell phone (mobile company) need to have the right technology. Both require NFC–Near Field Communication. NFC is a short-range, high-frequency wireless communication technology (like Bluetooth) which allows the consumer’s cell phone to interact with the cash register while inside the store or restaurant.

Most credit card processing companies, and even some banks, view NFC as one of the most secure ways to pay for a transaction on a mobile device. But mobile phones require a NFC chip, and without clear demand, mobile phone manufacturers won’t install them in their phones.

The future?

According to UK based Juniper Research, NFC-enabled cell phones (coupled with money transfers) is projected to total $600 billion by 2013. According to the report’s author, Howard Wilcox, “mobiles will become the wallets that people won’t leave the home or office without.”

In Canada, the race is on. Visa, Rogers, and the Royal Bank of Canada have teemed up for their first pilot. They are going up against the partnership of MasterCard, Citibank and Bell, who are also entering ongoing mobile payment trials.

According to the Canadian Wireless Telecommunications Association (CWTA), at the end of March 2009, Canadian wireless phone subscribers numbered 21.6 million. We send over 87 million text messages a day, and despite the sporadic population distribution of our vast country, wireless coverage is offered to 98% of Canadians.

Perhaps the question shouldn’t be if we’re ready for mobile-payments, but how soon can we get our hands on it?