I have been in the electronic payments industry for a long time and have seen it evolve from ATMs to credit cards, to debit cards, to prepaid debit cards, to decoupled debit cards, to PayPal, to MCash… what’s next. I left my house the other day to go to my office and discovered that I had forgotten to take my wallet. I thought for a few seconds and then continued on my way. As I was driving I thought about why he hadn’t convinced me to go back to my house for my wallet and it caught my attention; if it had been my cell phone I forgot, I would have hit the brakes immediately, made a U-turn in rushing traffic, and sped home as fast as possible to get my phone back, and I’m 48 – just think what the younger generation would do if they forgot, ignore that, the younger generation cannot and will never leave home without their cell phone.

Which brings me to my key topic: cell phones and currency exchange. Remember when ATMs were first installed in banks and people used them for free and then they started showing up in every convenience store and on seemingly every corner and people started paying to use them? Remember when credit cards were rarely used to accept the Amoco gas card and now our kids get credit cards at age 16? We are a society of convenience and we are willing to pay for that convenience. I attended PrePaid Expo last month curious to find out more about mobile banking, mobile wallets and mobile payments. I’ve been thinking recently that the market is ready for a mobile app that allows people to send money to each other using a cell phone. I know mobile banking is alive and well, but it’s more than an extension of my banking website on my PC that allows me to check balances and transfer money within my own accounts; but i’m talking about being able to send $50 to my daughter in college because she feels like she’s in trouble and well she asked me too.

That app is here. MCash has a product that I loaded onto my Blackberry Pearl, one of my coworkers loaded it onto his MotoQ and we can send each other money ‘INSTANTLY’! The money is tied to an mcash account which is basically a prepaid Visa so essentially you are transferring money from one prepaid card to another…but it works today…and pretty well. In less than 2 seconds I was able to go from ZERO to $20 in my account and spend that money 5 seconds later with my mCash card at the local coffee shop… all that transfer is done on our cell phones… now that’s technology! ! Obopay is another company that can do the same. Accounts need to be pre-loaded with a credit card or cash payment at a Greendot location, but soon they should be able to link you to a DDA so the load can come directly from a checking account. There was no cost to make the transfer with mCash, but there should be. I believe that Obopay charges 10 cents per transaction paid by the sender. I personally believe the recipient of the money should pay for the transfer of the funds and until there is a final transaction fee I don’t see it gaining much ground because someone has to pay for all this technology and CONVENIENCE! If people will pay $2.00 to use an ATM, what’s 50 cents to put $40 on your debit card so you can pay for that bagel sandwich, fries, and Snapple iced tea you just bought for you and your friend? In the short term, there will need to be a transaction fee for the transfer of funds, and ultimately the merchant will pay for the purchase of the product through the exchange; In the long term, I think another payment option will emerge like Visa/MC, which will allow merchants to receive payments directly from the mobile phone quickly and since it will be decoupled prepaid debit, the cost for the merchant will be less than exchange thus making them more willing to take it as payment.

I don’t know where the electronic payments industry is headed, but we’re sure we’re getting there fast. I like the mobile banking/payments route we seem to be taking, there may also be room for the smart chip yet; but who knows with all the security breaches and thieves now able to steal card information from live streaming data, we may have to go back to being a Cash and Barter Society…but hopefully not!