Mobile Payments in the United States at Retail Point of Sale: Current Market and Future Prospects

39 Pages Posted: 26 May 2010

See all articles by Marianne D. Crowe

Marianne D. Crowe

Federal Reserve Bank of Boston

Marc Rysman

Boston University - Department of Economics

Joanna Stavins

Federal Reserve Bank of Boston

Date Written: May 17, 2010

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.

JEL Classification: G21, L15, O33

Suggested Citation

Crowe, Marianne D. and Rysman, Marc and Stavins, Joanna, Mobile Payments in the United States at Retail Point of Sale: Current Market and Future Prospects (May 17, 2010). FRB of Boston Public Policy Discussion Paper No. 10-2, Available at SSRN: https://ssrn.com/abstract=1615500 or http://dx.doi.org/10.2139/ssrn.1615500

Marianne D. Crowe (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Marc Rysman

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-3086 (Phone)
617-353-4449 (Fax)

Joanna Stavins

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-4217 (Phone)
617-973-4218 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
461
Abstract Views
2,216
rank
89,911
PlumX Metrics