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While consumers in Japan have been using cell phones to pay for purchases for the last five years, and there have been some trials in the U.S., including in Atlanta, New York and the San Francisco Bay Area, it seems Americans may have to wait for the technology to take off, according to a report in The New York Times, as the numerous companies that need to work together to give the technology to the masses have yet to agree on how to split the resulting revenue, the newspaper reported.
"In Japan it was easier," explained Gerhard Romen, director for corporate business development at Nokia in the Times report. "It was just the major guys saying, ‘This is how it will be.’ "
A single carrier, NTT DoCoMo, accounted for more than half the Japanese market at the time the system was rolled out and had significant leverage with financial institutions and handset manufacturers, the report stated.
However, in the U.S., cell phone manufacturers, carriers, financial institutions and retailers must all work together along with an intermediary trusted by both the financial institutions and the carriers to activate the virtual credit cards inside the phone, the newspaper reported.
One problem is anyone using a credit card inside a cell phone is simultaneously a customer of the financial institution and of the carrier. "At the end of the day, the question is, ‘Who pays whom and how much?’" Romen said in the report. "The carriers and the banks need to get their act together on payment."
However, it is almost certain mobile-phone payments will eventually become popular in the United States because it will benefit everyone involved, the report stated. While, credit-card companies will gain a new way to attract and keep customers -- not to mention save money by no longer sending cards through the mail -- carriers receive a new source of revenue, and retailers get a faster checkout process -- always need in a c-store environment.
And according to Joanne Trout, vice president of worldwide communications for MasterCard Worldwide, there will not be an additional fee for consumers to use credit cards on their phones, the report stated.
But until everyone involved agrees to work together, Americans may be waiting up to five years, Key Pousttchi, head of the Wi-mobile research group at the University of Augsburg in Germany told the newspaper.
"It is completely possible nothing will happen in mobile payments in the next five years if everybody keeps thinking only about their own piece of the puzzle."