Mobile Phone Payments–The New Cash Register

By Douglas A. McIntyre Published Jun 28, 6:31AM EDT

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Barely a week goes by without the release of research about all the new things that smartphones do now or will do in the future. The future profits of smartphones appears to be the sale of apps and mobile payment features. Credit card companies are desperately trying to keep up with new software firms that will make it easier to use smartphones as virtual cash registers.

The most recent predictions about the mobile payment market come from UK research operation Juniper Research. The information is almost useless because it reiterates what other research have said, but it does provide support for the idea that shopping may change radically in the next several years.

Juniper “forecasts that the number of mobile phone users making payments for digital goods will reach 2.5 billion worldwide by 2015, up from 1.8bn forecast for 2011. This represents a growth of 40%.” Those numbers are conservative compared to what other researchers have said. That does not make them any more accurate.

The smartphone market has become so stuffed with applications and services that people can pick which ones they need or want. Apple has 350,000 apps at latest count. A small portion of those probably represent most downloads. An iPhone with 20 or 30 apps is an iPhone which has so many functions that the consumer can hardly keep track of them. Mobile payment systems will be added to those.

The core problem with mobile payments may be trust. Many people elect not to conduct e-commerce on PCs. These individuals remain concerned about the security of their data. Recent hacks into data centers as diverse as Citigroup’s (NYSE: C) credit card operations and large defense contractors make their worries something short of paranoia.

Mobile systems may be less secure than the wired ones that go from PCs to e-commerce sites. It would certainly seem that way to those who are uneducated in these matters. Data that travels through the air somehow seems insecure, at least to those who do not know any better.

The rapid rise in the use of mobile payment systems is like the predicted rise in any other technology. People have to decide, one-by-one, how they will behave. That is extremely hard to predict when it comes to features that consumers have never used before.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.