Mobile payments in the United States at retail point of sale: current market and future prospects

Marianne Crowe, Marc Rysman and Joanna Stavins

No 10-2, Public Policy Discussion Paper from Federal Reserve Bank of Boston

Abstract: Although mobile payments are increasingly used in some countries, they have not been adopted widely in the United States so far, despite their potential to add value for consumers and streamline the payments system. After describing a few countries? experiences, we analyze the prospects for the U.S. market for mobile payments in retail payments, particularly the use of contactless and near-field communication technologies. We identify conditions that have facilitated some success in other countries and barriers to the adoption of mobile payments in the United States. On the demand side, consumers and merchants are well served by the current card system, and face a low expected benefit-cost ratio, at least in the short run. On the supply side, low market concentration and strong competitive forces of banks and mobile carriers make coordination of standards difficult. Furthermore, mobile payments are characterized by a network effects problem: consumers will not demand them until they know that enough merchants accept them, and merchants will not implement the technology until a critical mass of consumers justifies the cost of doing so. We present some policy recommendations that the Federal Reserve should consider.

Keywords: Mobile commerce - United States; Payment systems (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-agr, nep-ban and nep-mkt
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Citations: View citations in EconPapers (16)

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Working Paper: Mobile Payments in the United States at Retail Point of Sale: Current Market and Future Prospects (2010)
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