The Key In Mobile Payments Is Payment

Includes: MA, T, V, VZ
by: Dana Blankenhorn

The Electronic Transactions Association, formerly the Bankcard Services Association, has launched what it calls a Mobile Payments Committee under Verizon (NYSE:VZ) lobbyist Jackie Moran.

The aim is to develop solutions for the "complex policy and business issues" of global payments made by mobile devices, according to the press release. In short, it's a way to keep the big industry players in mobile payments out of one another's' way.

The big credit groups are on the team as well as Google and processors like First Data, the Verifone equipment maker and Intuit, which has experience in building and connecting electronic marketplaces.

The group is supposed to focus on interoperability, on lobbying for mobile payments regulations, and on educating the public.

The words "horse" and "barn door" come to mind here. Several merchants around my Atlanta home are already sporting all sorts of mobile payment gear, from systems that read bar codes to those that use bluetooth connections between phones and pads to transfer data.

What they all have in common, along with the much-vaunted Square, is that they're really just interfaces with existing payment networks run by Visa (NYSE:V) and MasterCard (NYSE:MA). Both those companies are on this committee.

Presumably, a major aim is to negotiate away market confusion, as when Verizon Wireless introduced a phone with Google Wallet and disabled the wallet because another unit of the business was pushing a different solution.

But the phone companies have a very poor track record of technology leadership. In fact the best way to go broke I know of is to make a phone company the gatekeeper to your success. Note that the Internet's development was led by independent Internet Service Providers, and that the phone companies lagged developments substantially throughout the 1990s. The same thing has happened in mobility, with the phone companies in this case trailing the phone makers.

Jason Oxman, who became head of the ETA after his former employer, the Consumer Electronics Association, lost Apple as an exhibitor, insists this will be different because mobile payments are a "game changing business opportunity." But unless the acquirers within ETA take the lead and convince the phone companies to follow that lead, don't expect anything to happen.

When looking at mobile payments, investors should remember that the key word is payments, and look for profits to the existing leaders like Visa and MasterCard , whose standards will call the tune, rather than the network operators like Verizon or AT&T (NYSE:T) or technology players like Google and Square, that will mainly be dancing to it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.