Contactless payments since 1926

Alexander,

An excellent post, which clearly separates the notion of money and payments.

The other key criteria in payments, whether using real money, or electronic money is Trust. 

This is where the central bank printing presses, with fine details and watermarked paper, etc were used to deter counterfeits and establish trust in paper currency.

The cards schemes such as Visa and MasterCard built their networks based on standards and trust, recently enshrined in EMV.

Mobile payments require the same level of trust.

The secure ID is one part of it, but the backing of a trusted brand, whether the Bank of England, Visa, or M-PESA is also vital to ensure payments can me made and accepted.

Winning the battle for trust is the key to growing the volumes in mobile payments.

Great comment, Paul - "trusted" is indeed a crucial element (that's what the "T" in our company's name stands for, by the way).

The problem with "checking account", "mobile payments" and other popular terms is that, well, they're popular! Even if they might appear ill-defined in hindsight, they're so well entrenched in the popular lexicon that individual service providers might find it unviable to correct their definitions. Even the mighty Facebook had to reconcile itself with this harsh reality recently: Explaining its rationale for shutting down "Facebook Credits", Facebook admitted that people have such deeply entrenched notions about the term "money" that it wasn't worth its while to try and educate them about an alternative medium of exchange called "Facebook Credits".

Open-loop mobile payments like Google Wallet and M-PESA use banking or MNO rails, both of which already enjoy reasonable amount of trust of the average consumer. If we take closed-loop mobile payments, only consumers who trust the merchant's basic product (e.g. Coffee) will even visit the store and try out the merchant's mobile payment product (e.g. Starbucks Prepaid Card). Trust is a given under this situation. Against this backdrop, unless "trust" and "security" are used interchangeably, I don't know what more trust mobile payments need to cultivate with consumers. (I accept that trust is a far more important issue in a merchant's acceptance of a certain payment method versus another e.g. If PayPal keeps freezing a merchant's account for no apparent reason, I expect that merchant to lose trust in PayPal and refuse to sign up for accepting its PayPal Here mobile payment product. But, I'm unable to link this context of trust with secure element or secure identity). 

Even leaving aside "soft" issues like perception, consumer behavior and communication strategy, the fundamental point is this: Any given entity can have different representations under different frames of references. This doesn't make one of those representations wrong. A mobile payment does result in increments and decrements of a certain number at the database level but it undeniably involves transfer of what everybody accepts as money / consideration in the real-world level. I see a place for both representations of mobile payments, depending on the frame of reference used in a given context. As a matter of fact, even banknotes are numbers in a central bank's money supply ("M3") databases. If I were to stuff some currency notes in an envelope and send it to someone, there's a decrement in one M3 database and an increment in another M3 database. This doesn't take away the fact that banknotes are a form of money. 

"If I were to stuff some currency notes in an envelope and send it to someone, there's a decrement in one M3 database and an increment in another M3 database. This doesn't take away the fact that banknotes are a form of money."

I am afraid I have to disagree: money, by its definition, involves physical exchange at the point of sale. Any other form of payment (even if the physical money is involved at some later stage) is a "reference" to money.

As for the central bank's "M3" database, I doubt it that any record is changed when a given banknote is transferred from one party to the other. You may be referring to taking a banknote out of the circulation, but that's a different matter altogether.

Cash or Currency involve physical exchange. Money is a legal tender of exchange and is involved even when the exchange happens electronically e.g. Money Transfer Operator, Fund Transfer, etc. 

Far as I know, M3 is updated at country / city level when currency notes move from one country / city to another.