Mobile payments to make slow progress in 2012

Commercial mobile payment services will become more common next year, but mass market acceptance will take longer

By , IDG News Service |  Networking

Operator partnerships and small-scale mobile payment trials will start to bear fruit in 2012 and some analysts think Apple will make a play for our wallets. But mass-market acceptance will still allude the sector, according to analysts.

In some ways, 2011 was a disappointing year for mobile payments and NFC (Near Field Communications).

"There has been progress, but not as much as people had hoped for. We now also have a number of handsets with NFC, albeit a small number, and not as many as people were saying there would be at the start of the year," said John Devlin, group director at market research company ABI Research.

Even if the industry isn't as far along as expected, it is moving forward. For example, 2011 saw the U.S. launch of Google Wallet, which by the end of 2012 will prove to be a hit among consumers, according to ABI.

The slow progress mainly stems from operators that have had to rethink their business model for mobile payments in the last six months.

"I remember speaking to a number of operators in the May-June time frame and they were still very much convinced that companies would pay them to carry their cards. Their mindset was that if Visa doesn't pay them MasterCard will. That was quite a blinkered strategy," said Devlin.

But Google changed the game with the introduction of Wallet and spurred operators in a number of countries, including the U.K., to join forces and form a single platform, according to Devlin.

Operators launching commercial services set the stage for a battle between Google and operator joint ventures next year. Verizon Wireless, a member of the Isis payment venture, asking Google not to put its Wallet app on the operator's version of the Galaxy Nexus highlights the brewing battle.

"It is about being first to market right now and the likes of Verizon will be very wary that if consumers start using Google Wallet it is going to be very difficult to change them from that in the future," said Devlin.

While there is the realization that in order to be successful in the long term with NFC, payments and mobile wallets need to be ubiquitous, transferable and interchangeable, no one is ready to give any ground, according to ABI, But eventually they will find a "happy medium," which will serve Google and the operators, as well as consumers, Devlin said.

Google hasn't made any announcements about launching Wallet in other countries, but is expected to go live the U.K. during 2012, according to market research company CCS Insight's yearly predictions. Also, Google's service will make more progress as the operators struggle with the demands of a consensus approach and regulatory scrutiny, it said.

But the competition with Google isn't all bad. That different large companies enter the space helps show that it is a legitimate market, according to Jaymee Johnson, head of marketing at Isis.

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