Incentives are coming for payments by smartphones

By Anick Jesdanun

Associated Press

Published: Thursday, Feb. 27 2014 7:00 a.m. MST

Where mobile payments have been more successful is in emerging markets, where credit cards aren't as widespread. Payment systems there allow people to charge goods and services to their phone bills. In Kenya, a mobile service called M-Pesa became an easy and cheap way for people to send money to one another, Sebastian said.

As for security, it's mostly a matter of addressing misconceptions.

Despite consumers' fears, mobile systems typically offer more security than standard cards. Plastic cards have visible numbers that unscrupulous waiters can jot down. Lose one, and you must call the card's issuer to cancel. Mobile apps can be set up to require passcodes, and cards can be removed remotely.

Sam Shrauger, a Visa executive for digital services, said phone apps can also facilitate one-time card numbers, which won't work for additional transactions.

That could help reduce fraud should a merchant's computers get hacked, though experts aren't sure the recent breaches at Target and other retailers will be enough to push consumers into believing mobile payments are safer.

Matthew Talbot, senior vice president for mobility with the German technology services company SAP AG, said new technologies always take time to gain acceptance. He noted that ATMs and Internet banking faced similar fears early on.

Beyond security, mobile payments will need to offer something unavailable with standard credit cards. For instance, they could incorporate retailers' loyalty programs and offer deals based on past purchases and the phone's location.

At the Barcelona show, customers who order and pay for lunch with PayPal ahead of time are able to get on an express line to pick up their orders. A coffee shop with long lines every morning can also enable PayPal's technology.

"It's not about payments. It's not the technology. It's about solving real consumer problems," said Anuj Nayar, senior director for global initiatives with eBay Inc.'s PayPal business.

The technology to make all that happen is just starting to come together, Sebastian said. Back-end servers are getting faster at analyzing data, while location technology can now pinpoint customers down to the aisle.

Sebastian said mobile payments won't suddenly take off this year, but "it's closer than it's ever been before. We're on the cusp of it."

He means it this time.