Forget fumbling with cash and credit cards; smartphones have long been seen as a way to make in store purchases faster and easier. But several challenges need to be overcome before the technology takes off.
The field of mobile payments has been steadily expanding for years. Services such as Google Wallet let consumers enter their debit or credit card number into a mobile app, then wave their card over a reader to make a purchase. There's usually a way to confirm the purchase on the screen before it goes through.
There's also an option for merchants, allowing them to use a smartphone to accept payments, instead of being tied to a clunky point-of-sale terminal. The best known example is from Square.
But despite the technology being there, there are hurdles to widespread adoption, experts said on a panel Thursday at the Apps World conference in San Francisco.
"We're still looking at very low percentages for actual uptake for mobile transactions," said analyst Nick Holland of the Yankee Group.
Part of the problem is that most people simply don't know about the payment options available to them, said Fawad Khan, director of mobile payments at AT&T Mobility, which is trying to educate customers about Isis, a mobile payments system backed by AT&T, T-Mobile and Verizon Wireless that's being piloted in Salt Lake City and Austin, Texas.
Not helping matters is a lack of consistency in the terminology that carriers and apps providers use to describe the different mobile payment technologies, panelists said.
One key technology, for instance, is near field communication, or NFC, which allows payments to be made wirelessly by tapping a smartphone on a compatible receiver. Some Android smartphone makers call it NFC, but others refer to it by other names, such as "tap and send."
There are also challenges with the U.S. Federal Trade Commission and other regulatory bodies, which need to understand the technology themselves.
"The biggest challenge with the regulation of mobile payments is the education of regulators," said Jackie Moran, chair of the mobile payments committee and executive director of federal relations at Verizon.
"They don't come to these conferences, they're not up to speed. They're perhaps a year or two behind," she said.
Because the regulatory environment is still in its early stages, new entrants may take shortcuts in developing their apps, making security breaches more likely, other panelists said. And when there is a security breach or fraudulent activity, consumers won't know where to turn to for help -- their bank, the carrier or the app developer.
"Who owns the problems?" Holland asked. Still, the Yankee group analyst estimated the total market for mobile payments could be worth US$1 trillion by 2015, including all forms of mobile payment.
And while consumers in the U.S. wait for mobile payments to go mainstream -- it's already widely used in some countries, like Japan -- there are related smartphone technologies that can be developed along the way to make shopping easier, like apps for comparing prices or advising people which credit card to use to make the most of their loyalty rewards points.
