November 4, 2010, 12:57 PM

What’s in your (mobile) wallet?

Carriers are trying to get in on mobile payments, but will they be able to?

There’s one barrier to shopping via a mobile device even the most intuitive apps and easy-to-navigate m-commerce sites can’t get around: the cumbersome process of manually checking out.

It’s annoying on an e-commerce site. For m-commerce, you can multiply the annoyance factor by 10.

Amazon, PayPal and Google have eased the pain somewhat by bringing their electronic wallets to the mobile realm. If a mobile retailer offers it, consumers signed up for one of these payment systems can use their previously stored shipping and billing information to check out fast. Many retailers also enable their customers to access the shipping and billing information they have stored with an e-commerce site to speed mobile checkout.

Lately, however another mobile payment option is surfacing: quick pay via mobile phone carrier.

Just last week AT&T and Zong announced a program that lets AT&T customers pay for digital purchases through their mobile phones. Zong is just one of the payments providers in AT&T’s trial mobile payments program. (Another getting buzz is Boku). While on the site of a participating merchant, customers can pay for digital goods by verifying their mobile phone numbers, and the charges show up on the shopper’s mobile phone bill.

The problem for the carriers, however, has always been credit.  They are not experts at lending money because they’re not good at assessing consumer risk beyond the value of a monthly phone bill. They’ll lend shoppers $300, but they don’t want to lend them $10,000 the way a Visa or MasterCard credit card issuer would.

And that’s why Sprint’s approach may work better. Sprint is going bigger. It’s announced a Sprint Mobile Wallet slated for release in the next few weeks that enables consumers to set up an account (username, password, PIN) with Sprint and then register payment methods with a mobile wallet. When the consumer goes to pay, she selects Sprint Mobile Wallet and the service presents her with her registered payment options. She selects a payment account, enters her PIN and, voilà!, the proper account is charged.

Sprint’s approach is different than AT&T’s because it enables consumers to buy more than a digital good such as a ringtone or song download, but a physical good as well.  That’s because customers are purchasing using existing accounts with credit lines and balances a la Visa, MasterCard, Amazon Payments, etc.

Electronic and mobile commerce payment provider CardinalCommerce is hosting the transactions for Sprint. Once a customer enters his PIN, it is encrypted and sent to CardinalCommerce, which facilitates the transaction between the customer and the merchant, Sprint says. Merchants including SkyMall and Gameloft have already signed on to test the service. Sprint Mobile Wallet will be available on a variety of Sprint devices and can be used at no additional charge by customers on an Everything Data plan. Initially, Sprint Mobile Wallet will be available to download through Sprint Zone. In 2011, it will be preloaded on many new Sprint devices, Sprint says.

Sprint argues its mobile wallet enables developers to set up commerce more easily and quickly than integrating directly with each payment company. And it may be right.

It’s only natural carriers want a piece of the mobile commerce pie as they watch smartphone use climb and witness more consumers buying through their phones every day. But why would a carrier win out over PayPal, Google or Amazon’s mobile payment offerings?

My theory is that merchants will use two metrics to vet mobile payment contenders: fees and consumer adoption rates. PayPal, Google and Amazon have all long offered checkout programs and both customers and merchants know and trust them as payment providers. But Sprint and other mobile phone carriers are by no means little fish. They’re in the palms of millions of consumers every day. If carriers offer solid programs, let their wireless customers know about them and beat the competitors’ prices (even by a little) I think they just might be able to dial in.

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