Mobile Payments Are a Mess

The idea that we might someday use our mobile phones to pay for some things offline -- in stores, taxis or from vending machines, for example -- makes sense. That's been happening in places like Japan for years. And merging the mobile phone and wallet into one thing to carry around seems like a smart idea.

But getting there is going to be a challenge. In the U.S., there are simply too many corporate mouths to feed for mobile payments to be an easy consumer transition. These range from mobile software platform companies to banks to carriers to merchants.

And because there is no clear proclamation from above -- the government, a national train company, a single dominant merchant, or anyone -- about how to standardize, the nascent mobile payments industry is one of the most convoluted I've ever seen.

For example:

  • Verizon Wireless and American Express just teamed up for one mobile payments scheme, using AmEx's new Serve account, which is similar to a Paypal account. You will need to be a Verizon and Serve customer to participate.

  • Verizon is also participating in another mobile wallet project, Isis, with two other carrier giants, AT&T and T-Mobile.
  • Meanwhile, Google and Mastercard have teamed up with Citi and Sprint Nextel for "Google wallet."
  • Square is now processing $4 million in payments per day, both as a peer-to-peer service (you can accept credit card payments on your smartphone) and as a point-of-sale replacement for merchants.
  • Paypal's parent company eBay just bought Zong, a mobile payments company that works with Facebook and other online merchants.
  • Starbucks, a mobile wallet pioneer in the U.S., has developed its own service that runs on the back of its Starbucks Card system. Among other merchants, Groupon lets you buy meals and other things offline with its mobile app.
  • Apple and Amazon -- two mobile device vendors with huge e-commerce customer databases -- are surely hoping to get in on this (in Apple's case, for example, with iPhones that have NFC chips and hook into iTunes accounts). Samsung, Motorola and others are probably interested, too.
  • Toss in a huge handful of other startups that I'm forgetting about, such as Venmo, Bling Nation, etc., and other huge middle men like Verifone, banks, etc.
  • See? It's insane. And many of these companies probably have no interest in designing their services to play nicely with those of other companies. Someone is going to have to take the lead -- there will probably be a few winners and a lot of losers -- but there is no clear path yet.

    Like the first e-commerce boom in the 90s, there will be a lot of money spent in the race for the mobile wallet. In theory, this will someday be to the consumer's advantage. But there will be a lot of confusion in the meantime.