Report Finds That Mobile Payments Are Coming This Year, but It Will Be Messy

This year will finally be the year when mobile payments make it into the hands of millions of consumers, according to a new report by Forrester.

However, while consumers will have the capabilities this year, the research firm finds that mass-market adoption is still years away, and the category will be crowded with players, ranging from financial services firms, card networks, mobile operators, device makers, point-of-sale terminal vendors and start-ups.

Sure enough, in the past few weeks, we’ve seen reports of Google; Sprint; a coalition of carriers excluding Sprint, PayPal, Visa, MasterCard, American Express; and a host of start-ups that are all jumping into the space.

The report, authored by Thomas Husson, defines mobile payments broadly as any transaction that is initiated using a mobile phone–in the browser or by tapping the phone against a terminal to pay in the store.

Husson writes that while adoption may still be years off, what we will see in 2011 is large shipments of near-field communication devices from large handset makers that will make these tap-and-go transactions a reality.

The first NFC-compatible Android device is Samsung’s Nexus S (pictured here), which is now shipping. But Forrester estimates that manufacturers will ship between 40 million and 50 million NFC-enabled devices in 2011.

Still, the vast majority of purchases that are being made with mobile phones today are not physical goods, but rather digital content, such as applications and music.

But smartphones are routinely considered a threat by retailers, who fear that consumers are using their stores as showcases to decide what they want to buy, then using their devices to scan bar codes and conduct price comparisons in the store–and ultimately buying online for less.

Adoption of these features, however, is still fairly low. In the U.S., Forrester said, eight percent of survey respondents said they used their phone to compare store prices with online prices. About half of those people said they purchased an item on their phone that was not available while they were in the store.

Overall, the survey found that 12 percent of U.S. respondents said they had used their mobile phone to buy a product.

Forrester made a few recommendations for catapulting consumer adoption of mobile payments. It recommended making NFC-capable terminals more widely available, including in mass transit scenarios, and creating incentives for consumers to adopt the technologies by integrating loyalty awards and coupon redemption into the process.


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