Why Americans Still Can't Use Their iPhones To Buy A Coke

coca cola

Photo: kb35 via Flickr

Thirteen years ago, in Finland, you could buy Coca-Cola by sending a text message to a vending machine that could receive payment instructions via SMS.That was 1997, before the iPhone was even a twinkle in Steve Jobs’ original liver.

So why can’t we pay with our phones yet in the U.S.?

Sure, there are apps that let you move funds around using PayPal, but where are the apps that function more like a credit card? It’s a technology that has been well established in South America and Asia, where consumers wouldn’t think twice about purchasing a cup of coffee – or a television – with their mobile devices.

In the U.S., the market is lagging years behind, primarily due to three factors: the technology infrastructure isn’t in place, the adoption rate for mobile payments amongst merchants is low, and U.S. consumers have been skittish about adopting new pay-by-phone technologies (just as we were frightened of e-commerce in the early days of the web).

That hasn’t stopped a slew of companies from developing mobile payment systems, drooling over the opportunity to cut into what Juniper Research estimates will be a $630 billion market by 2014. Here’s a quick rundown of who’s in the space, and how they’re planning on cross-breeding your credit card with your phone.

bill hazelton chart

Photo: Bill Hazelton

“There’s no infrastructure in place, which is why it’s so hard,” says Scott Kveton, CEO of Urban Airship, a mobile application software developer.  “How do you support all the different handsets and all the different networks and not have to charge the consumer a huge chunk to make it happen?”

Thus, the established credit card networks are unquestionably in the best position to mine the coming gold rush. Visa and MasterCard, in particular, have the technology infrastructure and worldwide merchant network that the mobile payment companies simply don’t have.

With any luck, we’ll be able to use our phone to buy that Coke by 2015.

Bill Hazelton is the Founder and Managing Director of CreditCardAssist.com.

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