Mobile payment innovators will benefit as banks run scared

by Steve Blum • , , ,

Actually, it was invented in Russia.

Top of my list for the most influential people of 2013 in technology are the cyber thieves who stole the details of 40 million credit and debit cards from the Target chain of stores. Thanks to them, mobile payment and near field communications technology – e.g. chips in credit cards – might finally take off in the U.S. as fossilised payment processing companies are jolted into embracing entrepreneurial creativity. As I wrote last year

“Mobile payments is like waiting for Godot,” said Omar Javaid, managing director of BBO Global, speaking at a recent What’s Hot (and What’s Not) in Mobility 2012 forum in Mountain View. “Every year is the year of NFC but it never happens.” The problem, he says, is that processing payments is a system play. It’s a space that’s controlled by a few big players and they’re not very interested.

The pain of cleaning up the Target mess insures that biggest of those players – Visa and MasterCard – and the banks they serve will find the interest. They’ve just discovered that relying on 40 year old magentic strip technology to move $4 trillion a year in transactions is a lot more costly than investing in a systemic upgrade. Retailers, who will foot a large bill for new point of sale equipment, are likewise learning from angry customers that fear is an effective motivator.

Embedded chips are standard in Europe and mobile phone companies have become banks in Africa. Even more imaginative solutions and better technology are available. Godot might finally arrive in 2014.