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@EricS: Spot on +1. In all this hype about technology, many of us - including me - tend to forget what really matters. According to my calculations, 24 out of 25 Starbucks customers don't use its mobile wallet for making payments. Surely, Starbucks still can't make espressos fast enough?!

@Anon:

Since I've outed my location, I guess I invite comments like "Anyone who has ever used Contactless cards in the UK market knows this is utter rubbish". But, since posting anonymously is never my cup of tea, I have to respond to such comments: I've used both closed- and open-loop contactless cards in UK back in 2007-2008, the former at a Starbucks cafe inside the premises of a Top 5 UK Bank and the latter at a Krispy-Kreme store, both in Canary Wharf. (I did say here that "I was a very early adopter of contactless cards"). 

With that out of the way, my point is not about how people use contactless cards - even without using contactless cards in UK, I don't expect anyone to claim that they'll wave a contactless card from two feet away to make a payment. The crux of my blog post and comment is  how contactless cards could get used unwittingly in the system. For example, I've reached the till. I've two contactless cards A and B. I wish to use Card A to make the payment, take it out of my wallet and hand it over at the POS. All this while, Card B is still inside my wallet, which is two feet away from the POS. Based on my experience with RFID technology, I'll not be surprised if Card B is inadvertently charged despite being two feet away. I'll also not be shocked if, in addition, Card A is also charged as intended. Hence, double-dipping. This is the clear and present danger with this technology. This is how I see the average man on the street perceiving it. It hardly matters how much counterevidence is produced by the payments specialist to say that this can never happen.  

@Anon:

NFC and contactless are based on RFID communication standards, as @AlexanderP had pointed out above:

http://en.wikipedia.org/wiki/Near_field_communication

In fact, in another Finextra post on which I'd commented, the author wrote: "Contactless cards... work by using Radio Frequency Identification (RFID) technology".

Maybe if you'd read the previous comments to this blog post and the other post, you'd have reconsidered your comment. Not sure where you read my wild and inaccurate claim.

According to this FORTUNE article, UnitedHealth has created a brand new business around data that generates over US$ 30B in annual revenues within 10 years of inception. While this is in insurance, it illustrates the huge potential of data / analytics in an equally data-intensive industry like banking.

I'm not sure how mobile payment solutions will help merchants at all in this context. For payments at the POS, plastic card is the second cheapest method of payment for merchants (cash being the cheapest). Virtually all current mobile payment solutions use conventional card network rails and are costlier than plastic cards. If and when a mobile payment comes along that doesn't use card rails, it remains to be seen if it's cheaper than all other incumbent MOPs.

It's so ironic that a EUR 10 online purchase would have to go through CVV and VbV (and Mobile OTP, if it's in India) whereas such a high value EFT transaction almost bypasses exception management procedures! In a way, I attribute such incidents to standard software implementation methodologies where only the basic processes are implemented and all exceptions are swept beneath the rug as "nice to have" features that are deferred to the proverbial "next phase", which never happens in practice.

With its harebrained proposal to discontinue cheques from 2018, the UK Payments Council has brought this upon the industry and has driven the government into not seeing "a formal role for the Payments Council in the new regulatory structure". This should also expose that academicians and digerati spouting the "cash should be banned" and the "cheque should be killed" mumbo-jumbo are totally removed from the needs, wants and preferences of the average "man on the street". 

SQUARE reportedly uses social networks to assess reputation and credit risk while signing up new merchants to its mobile payment service. However, securitization of credit card outstandings based on traditional credit scores (e.g. FICO) will present a major challenge for mainstream adoption of alternative credit scoring models. Imagine a bank trying to get a rating for its credit portfolio comprising 50% people with 500 FB Likes, 30% having 100+ Twitter Followers and 20% with 50+ LinkedIn Connections. Or, encouraged by their success of getting prime ratings for subprime mortgages during the GFC, have they become totally confident of getting anything past CRAs?

I fully agree with Jan-Olof Brunila. That said, regulators and academicians always seem to propose bans: 

Five Ways to Stimulate Electronic Payments (Hint: Discouraging Cheques Is Not One Of Them)

In this process, they not only betray their inability to come up with superior business models but also underestimate the public backlash to their harebrained proposals for banning popular and convenient method of payments, as the UK Payments Council discovered to its dismay when it tried to discontinue cheques from 2018. 

I don't see how Internet availability across the population is relevant. What counts for this discussion is Internet availability across the banked population and, on that metric, the situation in India is largely the same as in many other parts of the world. Inability to provide the current balance is not a reflection on how modern the ATM system itself is. As I'd previously pointed out, the problem lies in the system landscape. Even the most modern ATM can't display current balance if the underlying switch software can only talk to the mainframe accounting system at midnight.