Prediction No. 4 (Mobile Wallets) Already Coming True

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Okay, that was fast. This weekend I put up my annual prediction post, Seven Technologies That Will Rock 2011. Already, one of them is already looking pretty solid: Prediction No. 4 on the rise of mobile wallets. Let’s revisit that prediction:

4. Mobile Wallets: If you could use your cell phone as a credit card, would you? Everyone from Apple and Google to Nokia want to make that a reality and tap into the mobile payments market. Both Apple and Google are exploring this opportunity. Google bought mobile payments startup Zetawire to gain experience and the latest Android phone, the Nexus S, comes with an NFC chip—the same kind that is embedded into credit cards and lets you pay by waving it over a wireless reader. The iPhone 5 also may come equipped with an NFC chip, and Apple was sniffing around mobile payments startup BOKU last year for a possible acquisition. It is going to take more than just NFC chips in every phone to make mobile payments a reality, but efforts by the major players this year should begin to move the needle.

Well, it looks like Google (and PayPal) are getting serious about NFC technologies. Today, Businessweek reports:

Google (GOOG) is considering building a payment and advertising service that would let users buy milk and bread by tapping or waving their mobile phones against a register at checkout, two people familiar with the plans say. The service may make its debut this year, say the two, who requested anonymity because the plans haven’t been announced. It is based on near-field communication technology, which can beam and receive information wirelessly from 4 inches away.

. . . A single NFC chip on a mobile phone would hold a consumer’s financial account information, gift cards, store loyalty cards, and coupon subscriptions, say the people familiar with Google’s plans. Users may also be able to make online purchases from their phones. By scanning a movie poster, for instance, a consumer might read reviews and use the Google service to purchase tickets.

The article also mentions PayPal’s interest in tapping into NFC-enabled payments on mobile phones. PayPal “may start a commercial NFC service in the second half of 2011.”

Google, PayPal, Apple and all the big technology companies want mobile wallets to become a reality. But a lot of things need to happen before it catches on. The chips first need to be embedded in lots of mobile phones (Google, Apple, and Nokia are working on that). But then on the flip side, merchants need to install NFC chip readers at their cash registers, which is an expensive proposition (a few hundred dollars worth of equipment per cash register). Adoption on the merchant front will be slower than the tech companies hope.

And then there is the issue of consumer adoption. Just because your Android phone pr new iPhone comes with an NFC chip doesn’t mean you are going to use it, much less link it to your PayPal, iTunes, or Google CheckOut account. How many features are on your phone right now that you never use? Exactly.

In order for mobile wallets to become a mainstream technology, Google and Apple and Verizon and AT&T will need to start marketing the feature aggressively, and sign up some big retailers to get people to try it out with some promotions. Mobile wallets tied to local offers could do the trick. Groupon and other daily deal services could start to offer coupons redeemable through an NFC swipe, finally tying the online deal with the offline purchase in an electronic transaction that can be measured and monitored.

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