Unnecessary. Cumbersome. Not Secure. 

The term "mobile payments" often elicits some degree of skepticism, depending on who is being asked. Consumers don't often understand what mobile commerce means to them, and financial institutions don't often understand wireless applications. U.S. wireless carriers, which need new revenue streams and deeper relations with their customers, have the opportunity to use their strengths and shape the future of mobile payments through innovative and meaningful payment services to consumers. 

Pragnesh Shah

From transaction fees to increased customer "stickiness," wireless carriers have much to gain in this evolving mobile payments space. They also have much to lose if not aggressive or allow themselves to be pushed to the side in the process.

The good news is that the carrier holds the keys to the fate of mobile payments, as the extent of consumer adoption will almost entirely depend on how mobile payment solutions are developed and implemented. The customer experience is crucial. The form factor of a mobile phone dictates that mobile payments must be extremely easy to use. They must fulfill an end-user need and provide a sense of immediacy so consumers believe that the transaction simply cannot wait.  

The "coolness factor" of mobile payments cannot be underestimated, in that early adopters are likely to be youth and young adults apt to experiment with new payment types. But mobile payments must be offered by a company (or companies) that consumers trust, because let's face it; people have an emotional attachment to their money.

WILL CARRIERS MEET CUSTOMER NEEDS?
Mobile payments take on a variety of forms all of which can meet customer needs but only if done well. Why not simply use your mobile phone to settle up with a buddy for yesterday's lunch? Peer-to-peer (P2P) mobile payments can blossom but hurdles such as registering and managing new accounts need to be minimized. Why expect youth to use their parents' credit cards to make online E-commerce purchases when they can simply use their mobile phones instead?  Carriers have the opportunity to leverage their core assets for new revenue streams. Why fumble around with purses and pieces of plastic when you can simply tap-and-go with your phone to purchase in a retail store? Carriers have customer reach and capabilities that retailers are interested in. Why wait to get online or drive to a branch office to move funds from your savings to checking account? Carriers can (and are) simply enabling mobile banking, but security and privacy are of paramount importance here.

The mobile carrier has a vital role to play in stitching together a seamless customer experience with mobile payments. Carriers sit at the crossroads of multiple solutions that can drive significant relevance to customers in their busy day-to-day lives. For instance, why not deliver a customer experience in which a consumer "zaps" a 2D bar-code image or gets a mobile advertisement, then receives product information and an offer in the form of a mobile coupon, which he or she stores in the network-based mobile wallet, and then goes to a physical store at the mall and does a phone-based contactless payment and coupon redemption? Seem far-fetched? Not really. The mobile carriers are perfectly situated to drive such initiatives like no other entity can.

DO CUSTOMERS TRUST MOBILE CARRIERS FOR PAYMENTS?
As with financial transactions of any type, in order to truly engage consumers and drive them to purchase, a mobile payment offering must reassure them that their money is in good hands and that the transaction is secure. Carriers, and their associated brands, generally have a solid foundation of trust. Sure, sometimes a bad customer service or bad network experience can drive some dislikes on the part of the customer. But at the core, U.S. customers separate dislikes from distrust, and they do trust carriers. They trust that their phone calls are private. They trust that their wireless data transmissions are not compromised. They trust  and have an emotional bond with their mobile phones.  And when financial institutions are involved, co-branding with them further builds on that trust. 

In the past 6 years, U.S. carriers drove and delivered the needed foundation of wireless Web and wireless data usage. Now that carriers have gotten customers comfortable with more than just talking on mobile phones - checking stock quotes, downloading music, surfing the wireless Web - they are now primed to go the next step into the arena of mobile payments.

Because the mobile payments industry in the United States is in its infancy, carriers have the opportunity to get in at ground zero, to build and drive how mobile payment solutions are developed, implemented and adopted. By delivering on immediacy, simplicity and trust, mobile carriers have tremendous opportunity to lead this new industry.

Carriers should be bullish on creating new mobile payment experiences and begin experimenting and learning now. They can make the mobile phone and everything that goes with it that much more indispensable to consumers. And for themselves, drive new revenues and not be disintermediated by others.

Shah is president and CEO of mobile payments company Mobilians International
and former vice president of Product Innovation at Sprint Nextel.