Want to know what's missing from the mobile payments revolution?
While banks are busy whining about federal regulations, real or imagined, big merchants are moving to eat their cheese.
This wasn't a danger two years ago, or even a year ago. Systems like Square, while growing, are not a threat because they're basically an interface, another way to use credit cards. Even a system like Isis needs banks as partners. When the Girl Scouts go into mobile payments, it's no big deal because the scouts are just finding a way to process existing credit cards.
These moves don't threaten banks directly. They may favor some large banks over others, they may favor new payment networks over incumbents, but they don't endanger banking itself.
The danger has always been that someone else might try to grab the merchant or consumer side of transactions. The danger is now here.
The moves by Wal-Mart (WMT) and Target (TGT) to deliver a mobile payments system, combined with Home Depot's (HD) decision to start taking Paypal (EBAY) in its stores, are not like Square or Sage. They're a serious effort to get into the real action - the money, the data, the accounts. You know, banking.
As is often the case it's Wal-Mart that's furthest along and represents the largest threat. The company already has its own payment card, a reloadable pre-paid card. Despite its abandonment of plans to create its own bank in 2007, it's doing a lot of what you can call banking services - cashing paychecks, handling money transfers, and (now) taking the equivalent of checking account deposits.
A Wal-Mart, Target or Home Depot mobile payments solution gives those merchants the power to do instant couponing with customer data, but it's a very short step from that to merchants acting as banks themselves, through processors such as Visa and MasterCard, and in time cutting the banks out of their fees and float entirely.