square-picture-300x283This week several news items speak to relatively modest ambitions of companies working in payment systems: rather than perfection over a wide domain, they seem to aim at incremental gains.

Microsoft announced at Windows Phone Summit 2012 plans to include native support for NFC (near-field communications--a wireless technology good for "tap and pay") and a "mobile wallet". Joe Belfiore, corporate vice president for Windows phone, characterized the latter as "the most complete wallet experience". That sort of superlative is typical of Microsoft presentations.

The technical details known to this point make it clear, though, that Microsoft is moving in the direction of partnering, rather than domination. The Google Wallet Secure Element is built into Android handsets; in contrast, Microsoft Phone depends on a "secure SIM" (secure subscriber identity module) that is the responsibility of the cellular carrier, and can be moved between handsets. Belfiore went on, "In general, the mobile operators prefer the model of the secure element on the SIM ..." Among other consequences, this allows the cellular provider to determine the terms of the mobile wallet.

Microsoft also is going outside, to JPMorganChase, to develop a native WindowsPhone app to operate within the wallet, and to Isis. The wallet itself does little more than aggregate credit, debit, and loyalty cards--the carriers have responsibility for security, and vendors will have to write applications to get the wallet to do more than payment card emulation at the point of sale (POS).

All this makes Microsoft's mobile wallet undemanding for retailers to adopt: they have to change nothing. It remains to be seen how much the Microsoft wallet energizes developers, carriers, or end users; for now, it inspires little passion.

mPowa attacks Square

British firm mPowa announced its intention to enter the US market popularized by Square: augmentation of a mobile handset with a physical add-on to allow it to receive credit-card payments. mPowa advertises the low transaction fee of 0.25%. Where Here and Square have emphasized their applicability to individuals and small businesses, mPowa hopes to make itself useful to major retailers as a facilitator of MPOS (mobile POS). mPowa sees opportunities not only in bigbox aisles, but on service calls and otherwise outside store walls.

Wallaby compresses credit-card bundles

Another company which promotes its compatibility with existing consumer practices is Wallaby Financial. Wallaby squeezes all the information from all your existing credit cards into one, which you can then carry as a slimmer alternative to the stack most consumers tote. As with other items presented here, the point for retailers is to change operations as little as possible--except for the change of increased convenience for consumers.

Whether any of these innovations matches its advertising, or even is attractive enough to keep a place in customers' pockets twelve months from now, depends on the details of their implementations and roll-outs. "The Payoff" isn't in a position to know these yet. It's only healthy, though, for everyone involved in payment systems to learn a little about the "frictions" in existing practices and what might smooth them out.

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