Giant Corporations Battle for Control of Mobile Payment

The technology of using cellphones as credit and debit cards, which has been used overseas, reaches infancy in the United States. Instead of swiping cards, the phone is waved on a reader at the checkout counter.

But swiping is the easy part. The difficult phase lies not on the consumers, but on giant corporations jockeying for control on these mobile wallets.

The battle involves credit card issuers, banks, payment networks, mobile phone carriers, and phone manufacturers, each wanting to get paid for every mobile payments made. These small, hidden fees can add up to tens of billions of dollars every year in the US alone.

On one side, we have the traditional payment companies like Visa and MasterCard, along with banks that issue credit cards to customers. They want to remain relevant in the new system and continue to collect fees from merchants.

On another side, there are companies like PayPal and Google, which want to play a part, as well as Apple, mobile carriers, and phone manufacturers who want to collect fees because they control the phones themselves.

And at the center of the argument are the retailers, who may have the final say on which mobile payment scheme they would adopt.

Consumer advocates fear that a mobile system would result to higher fees and even question whether the people even want the new system.

Mobile payment system has been utilized in other countries. In Africa, where many people do not have credit cards, payments can be made through SMS. Meanwhile in Japan, people have been swiping phones at convenience stores and bus stations for years. These systems work without a hitch because these markets may have a single dominant mobile carrier, or a small number of banks, or a strong central bank.

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