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Even when consumers become more comfortable with mobile payments, most forms of such payments available today will only replace the physical plastic form factor with the mobile phone form factor - the underlying credit card account and the payer's relationship with the issuer bank will still remain intact. When they were launched a couple of years ago, Boku, Zong and other GenY Mobile Payments threatened to remove credit card accounts and disintermediate the issuing banks by executing the entire payment transaction on telecom carrier rails instead of card network / ACH rails used by most other mobile payments providers. However, with many GYMPS now allowing payers to link their - ahem - credit cards to their mobile phones, that threat has passed.

When faced with declining interchange revenues post Frank-Dodd-Durbin, AmEx and a couple of other banks - albeit in the USA - did bite the bullet by trying to charge for debit cards. That they faced tremendous consumer resistance and were forced to roll back their plans is true but the incident does prove that banks don't shy away from levying explicit / implicit fees to recoup rising costs. But, they're still not doing it for checks. Wonder why. Something tells me that by merely levying fees for check usage, banks won't be able to reduce its consumption significantly. Personally, I believe that most ePayments still have too much friction for the average man on the street to forego the convenience of checks even if the latter attract fees. My belief is reinforced by the decision of ING Direct to actually introduce checks for Internet-only accounts.  

Barclays' PingIt is surely a step in the right direction and I look forward to seeing some figures on how many people it has prevented from writing checks.

Alas, but I think she was right! The new shopping behavior spurred by RedLaser and its clones underscores the threat to physical stores. Going forward, we'll only only see more - not fewer - "BORDERS moments". But, with less than 10% of all shopping currently happening online, I don't think physical stores will vanish anytime soon, even if they've already entered a terminal decline. 

I don't know how common the practice is but I've heard that some stores have started blocking WiFi / 3G access or otherwise blocking customers from scanning barcodes on products in their shelves. Instead of resorting to such myopic behavior, I hope they concentrate on making sure that the "Shop Online, Pickup at Store" option turns out to be the best deal.

I notice how this and a few other recent Finextra articles on eBills begin with with "paperless" and jump quickly to discussing the advantages of one form of eBill ("eBill via Email") over another ("eBill via Portal"). Makes me wonder if these two eBill camps have given up on fighting paper bills altogether and have instead decided to spar against each other. On second thoughts, that's not such a bad move. After all, paper bills don't seem to be going away even a decade after they were introduced. According to a Forrester report I remember reading sometime back, ebill adopters - via email and portals alike - are outnumbered by over 1:2 by non-adopters comprising Holdouts, Fence-Sitters and Quitters. Double-dippers only exacerbate the situation.

At the most basic level, bills are a necessary evil regardless of the form in which they reach me. On the other hand, music is a delight whether I listen to it on vinyl or MP3 or any other form in between. Therefore, I must be pardoned if I simply don't get the connection between bills and music / iTunes.   

One look at Nokia Money in action and you saw friction in so many steps. Besides, the Indian regulator RBI restricted its use to payers and payees who already had a bank account with YES Bank or one of the few other partner banks. Against that backdrop, Nokia Money's goal of bringing financial services to the unbanked was a non-starter from the word go.

On another note, I'm not sure how many multibillion dollar behemoths will find revenues from 1.2M fee-paying customers to be more than a rounding error on their P&L. Such a figure is surely dream-come-true for startups and maybe that's who we'll eventually see in mobile payments eventually, with the successful survivors getting acquired by banks - like it happened in prepaid cards (eCount - Citi) and alternative payments (Revolution Money - AmEx). 

"...so that not only is fraud reduced, but customer satisfaction is maintained at the same time." To which, let me add "revenue". While absolute fraud loss figures are useful, the more important metric is "fraud loss as a percentage of transaction value". After all, like DSO, the easiest way to achieve zero fraud loss is by selling nothing! 

Let me venture out with a few of my own answers to some of your questions:  

1. "a compelling value proposition to tap my phone vs. swiping a card": Maybe there's none? With the new generation of offers being applied directly to the credit card account, even mobile coupon delivered on mobile wallets has lost its appeal. 
2. "a simple UI that would make it easy to pay my babysitter": What's wrong with paying with cash? Even assuming the payor wants to go cashless, there's no guarantee that the payee can accept alternative forms of payments. 
3. "It was disappointing that no exhibitor shared quantitative data on how much quicker ... their solution was, as compared to payment methods in place today.": Maybe their numbers prove what many people have experienced in practice, namely, that nothing is faster than cash or credit card?   

Your friend's comments remind of a recent WIRED article titled "We Don’t Have a Mobile Payment Problem; We Have a Mobile Shopping Problem".

While a fall in absolute value of fraud losses is good news, it would be equally interesting to know the trend in fraud loss as a percentage of total transaction value. 

Apple iTunes is a merchant. The millions of cards it has on its file are issued by banks, not Apple. It certainly needs banks to function. Its great UX might sometimes tempt one to buy everything from it instead of facing the friction posed by many other sites - etailers and banks alike - but, unfortunately, one can only buy from iTunes what Apple wants to sell on iTunes.

Even if it braved regulations to enter banking - unlike Google which cited regulation to give up on similar plans - I doubt if Apple would bother doing so: As a tech company, it enjoys better valuation compared to banks, so becoming a bank wouldn't be in the best interest of Apple's shareholders.

Talking about SQUARE, it disrupts POS as you've rightly pointed out. But, in that capacity, it should worry NCR, Verifone and other POS manufacturers. Whether a transaction happens on an NCR POS or SQUARE POS, the bank that has issued the credit card used in the transaction earns the same interchange fees. In fact, before SQUARE, banks had declined merchant accounts to many sellers on account of their low transaction volumes or high risk profiles or both. Now, with SQUARE coming along and taking on the entire merchant risk, these merchants can now accept credit cards which they couldn't before, and banks can earn more interchange fees from their card transactions without bearing any additional acquisition risk. Seen this way, banks should cheer SQUARE along and not be worried about it!

Whether the payer uses Apple iTunes, PayPal, SQUARE or any one of a plethora of mobile wallet offerings, most payments today continue to happen on card network / ACH / RTGS - i.e. "banking rails". Therefore, banks continue to firmly occupy their corner of the four-corner payment model and the newcomers don't threaten their relevance as banks. A couple of years ago, Boku, Zong and other GenY Mobile Payments (GYMPS) seemed to threaten the position of banks by entirely bypassing the banking rails and instead using MNO rails for payments. With many GYMPS recently announcing support for the addition of bank-issued credit cards and checking accounts as additional source of funds, I think that threat has also largely receded.

@Darren N:

Thank you for your reply.

I agree that SOA provides the technology to let banks remain impervious to their internal silos. However, I don't see technology as the determining factor here. From a business standpoint, given the current org structures and bonus policies, why should banks want to ignore silos?

During the period between the preceding comments, I went thru' an experience that I must share since it highlights yet another barrier in the way of silos coming down: I have a checking account and a fixed deposit at a certain bank. I wanted to open a pension fund account in the same bank branch. According to regulation, I had to go thru' a fresh KYC process. What's worse, monthly checking account statements from the same bank didn't qualify to prove my name and address since, as per regulation, KYC can only happen with third-party documentation i.e. documentation issued by another bank / utility / MNO. I'm sure the regulators have a good reason to formulate such policies. However, it can't be denied that they hamper banks from breaking out of silos even if they (i.e. banks) wanted to.

IMHO, there's a long way to go before banks face clear and present danger from nonbank financial services providers. Many of us will load our PayPal Wallet with a few dollars to buy a coffee or a sandwich. The bolder lot amongst us won't mind using our spare cash to make a few unsecured loans on PROSPER or ZOPA. But, how many of us will move our entire life savings from a bank to a mobile wallet (even assuming it was possible to do so) or lend it out on a nonbank lending website? I could go on with more examples but I hope this shows that the threat posed by nonbanking FIs to traditional banks is highly overrated.

I look forward to the day when silos come down and I can enjoy a superior customer experience while dealing with banks. However, I recognize that there are far deeper issues at play here.