Mobile Payment Systems Poised to Kill The Credit Card

Monday’s headline from CNN Money says it all: The end of credit cards is coming.

Although NFC technology and mobile payment systems have been beta tested in very small pilot programs in recent years, 2011 is widely expected to herald the dawn of a new era in how consumers pay for goods and services.

Last week on MMW, for example, we covered  how Starbucks is coming on every bit as strong as its coffee in the realm of mobile payments. This year, the coffee giant is expanding its mobile payment system across the US in 6,800 Starbucks stores and 1,000 more Target-based locations.

But why is this finally the year when mobile payments take hold?

As CNN reported this week, 2011 is the “magic year” because millions of phones capable of making contactless payments – potentially even the 5th generation iPhone – are going to begin reaching consumers.

Given the high hopes for mobile payment systems this year, contactless payments are forecast to make up $22 billion in transactions by 2015, according to research firm Aite Group.

“Mobile payment is going to get really interesting and is going to see a lot of activity in 2011,” said George Peabody, director of emerging technologies at Mercator Advisory Group. “We’re going to start seeing more and more people leaving their homes without their wallets.”

On the other hand, Jane Cloninger, director at Edgar Dunn & Co., a consulting firm specializing in financial services and payments, cautions that the aforementioned technology – and consumers’ comfortable adoption of it – will take some time to catch on.

“I definitely believe that the mobile wallet will eventually replace the plastic card – but it’s going to take some time because consumer habits take a long time to change,” Cloninger warns. “But where before it’s been a lot of discussion, we’re at the point now where you’re going to start seeing momentum toward it and going to see it move beyond the trials and into reality.”