Mobile POS and mWallets - Spinning at the North Pole?

Various industries such as banking and financial services, consumer electronics, telecom carriers, and retailers are all seeking ways to capitalize on mobile shopping and mWallets that put the consumer’s wallet into their mobile phone itself. Mobile POS attempts to transform the shopping experience for the consumer through varying levels of transformation of the consumer’s shopping and checkout experience. One flavor of mobile POS promises to put the mWallet in the mobile phone itself and allow the phone to communicate to the POS terminal using NFC (Near Field Communications) in a secure manner. However, mobile POS is complicated due to several factors:

• It requires co-operation between multiple parties – card issuers, telecom carriers, networks, processors and last but not the least, merchants
  
• Large retailers have to foot high capital infrastructure costs to upgrade POS terminals for NFC compatibility. Many of them have just spent money upgrading their POS terminals to versions with high resolution color screens as well as optical scanning using lasers, etc. In an industry with razor thin margins, that is a big ask
  
• Authentication of mWallets using intermediaries that will play the role of TSM (Trust Services Manager) is an emerging model with many players vying to act as an intermediary and acting with co-opetition in their minds
  

Alternate forms of mobile POS promise hosted mWallets where it is not necessary to store the valet in the phone and so there is no need to upgrade POS terminals with NFC. This is a big relief to everyone; however, such transactions can be subjected to higher interchange fees if they are considered to be of “CNP (Card Not Present) type. EMV (Europay, Mastercard, and Visa), a standard that is popular in Europe and has enhanced security features to prevent fraud in transactions is another distraction that is clouding the picture. Should merchants migrate to EMV compliant POS terminals or NFC compliant terminals or something else or nothing at all (if they leverage hosted wallet models to complete the checkout process)?

Although enabling technologies for mobile POS are mature and several field trials have been successful, multiple parties with interests that don’t necessarily match, multiple standards, and interchange fee related regulations and ROI challenges are but some of the reasons that will keep everyone guessing on the date when mobile POS will become real.

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