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"What we wanted to focus on was removing the mechanics of the transaction and building the relationship between the merchant and customer," said Megan Quinn, director of products at Square, which occupies space at the Chronicle building at Fifth and Mission streets.

But, of course, Square isn't the only company working hard to crack the nut of mobile payments - and they all face considerable challenges.

Google, Visa, MasterCard, VeriFone, eBay's PayPal division and a joint venture among AT&T, Verizon and T-Mobile are attacking the problem in various ways. In most cases, those businesses are going a different direction than Square, employing near field communications (NFC) technology that allows people to tap their phone near a terminal to make a payment.

Done right, mobile payments can accelerate the monetary exchange, while streamlining the issuance, acceptance and storage of receipts, coupons and loyalty cards. Down the road - once consumer and retail use reaches critical mass - the hope is that people will be able to leave their wallets at home altogether.

But there's a chicken and egg paradox: Customers won't start using mobile payments in great numbers until they're accepted in great numbers, and retailers don't have a huge incentive to roll these systems out until customers are clamoring to pay this way.

There are only about 150,000 retailers nationwide that accept payments over MasterCard's NFC-based Paypass readers. Google's Wallet payment app works with this system, and industry rumors suggest the next iPhone might as well.

Square, which has so far focused on small merchants has about 20,000 that accept Card Case.

Another big challenge is human inertia. To get people to download apps, key in credit card numbers and transform a habit they're very comfortable with, mobile payments will have to represent more than a little improvement over what they do today.

"You have to offer them a compelling reason to do it," said David Mangini, an IBM executive focused on mobile payments. "At a very, very minimum ... it has to be just as convenient, just as broadly accepted and just as safe."

One of the big knocks on basic NFC payments is that tapping a phone near a reader doesn't represent a whopping improvement over swiping a card. In addition, merchants have little to gain by replacing one expensive payment infrastructure with another, some observers say.

"It doesn't upset the status quo," said Nick Holland, senior analyst at Yankee Group. "It doesn't really change the original business model and it all goes through the same rails."

Receipts, deals Google argues that its NFC-based Wallet app is a big step forward for a few reasons. A single tap replaces not just the payment, but also the exchange of receipts, coupons and loyalty points.

On top of that, Google believes it's tying together the on- and off-line retail worlds, by allowing consumers to move the deals they spot on the Web into the Wallet app, where they can redeem them in the real world. Google Wallet also advertises nearby deals when users open up the app.

"For the consumer, it's really about tap, pay and save," said Osama Bedier, vice president of payments at Google. "On the merchant side, it's about closing the loop on that advertising."

This is a critical goal for Google, too, as it experiences slowing growth in online advertising - 93 percent of commerce still occurs offline, according to Forrester Research

For its part, Square steers around the limitations of NFC - as well as the various roadblocks of wireless carriers and credit processing networks - by leveraging the powers of the Internet to process payments. The credit card information is stored online, in Square's secure cloud, not on the device itself.

Square, which started by providing small attachments that allow merchants to swipe credit cards using mobile devices, acts as the merchant of record for its customers. This allows the businesses to quickly start accepting credit cards without going through the usual drawn out and expensive process of applying for a merchant account. But it also clearly puts more risk onto Square's shoulders.

Square turned on the hands-free feature on its Card Case app, which takes advantage of the so-called geofencing capabilities in the latest version of Apple's mobile software, in an upgrade to the app in November. The feature is only available on Apple devices to date

Quinn said "automatic tabs" represents an obvious improvement over traditional payments and it's quickly driving user growth (though the company doesn't disclose user numbers).

In addition, retailers have seen revenue leap as much as 20 percent since integrating the app. It drives traffic by highlighting nearby establishments, and the ease of payment encourages customer loyalty, the company says. Tips also tend to go up.

Is it safe? But the question that has dogged Square - and indeed hangs over much of the mobile payment space - is security.

Early last year, VeriFone CEO Douglas Bergeron blasted Square - its attention-grabbing young competitor - for what he called serious security flaws. In an online video, he argued that any bad actor could use the Square dongle and an easy-to-create app to skim credit card numbers.

Square CEO Jack Dorsey, also the co-founder of Twitter, defended the company's security practices in a letter. He also highlighted the inherent insecurity of credit cards, noting that any sketchy waiter is equally free to steal your information.

Meanwhile, Quinn argued that Card Case is actually more secure than credit cards because it only works if you're in the location and your face matches the picture that pops up on the merchant's screen.

The radio technology behind NFC has taken some security lumps, too.

Late last month, a security researcher at a Washington, D.C., conference used a wireless reader she bought on eBay to highlight some weaknesses of radio frequency identification, Forbes reported. She pulled the critical data from an RFID-enabled credit card through a volunteer's clothing, encoded that data onto a blank card and put it to use onstage.

Holland said that any new form of payment inevitably creates new forms of fraud. The challenge will be to educate consumers and merchants about how to minimize the risks.

"Clearly, having a device always with you and connected is a very inviting target for criminals," he said. "Any safe is only as strong as the key."

The company also operates GameCoins.com, a centralized place to discover new gaming titles and earn virtual currency to be spent on games. Game Coins can be converted into a publisher’s virtual currency, as well as into Facebook Credits.

To date, Sometrics has helped process 3.3 trillion units virtual currency since the company’s launch in 2007. Sometrics also says that gaming partners see an average 15 percent revenue lift through the use of its virtual currency payment solutions.

To date, Sometrics has raised $6 million in funding from the Mail Room Fund, an investment consortium that includes the William Morris Talent Agency, Accel and Venrock, as well as AT&T, Greycroft Partners, and Steamboat Ventures.

Sometrics will be added to American Express’ Serve digital payment and commerce platform. The credit card giant debuted Serve in March as a way to integrate a variety of payment options into a single account that can be funded from a bank account, debit, credit or charge card. American Express will continue the operation of Sometrics’ current business and will work with Sometrics will allow Serve customers to purchase virtual currencies via the platform. Over time, AmEx plans to integrate Serve into the payment path of the games that Sometrics supports.

Of course, American Express isn’t the only credit card company looking to capitalize on the changes taking place in the payments industry. Visa has big plans to dominate mobile payments and the digital wallet, buying virtual goods payments platform PlaySpan for $190 million, as well as acquiring mobile payments company Fundamo for $110 million.

But in the past year, American Express has actually been making some interesting partnerships in the payments space, recently teaming up with Foursquare, Facebook and even Zynga for deals. This could help the company dominate social payments and close the redemption loop.

And AmEx has been boosting its Serve platform with carrier partnerships, including Sprint and Verizon. Serve has also formed relationships with other partners including TicketMaster, AOL, and a number of gaming companies (however, those names have not been disclosed yet).

Of course, some aren’t so bullish on NFC, notably eBay (who owns PayPal) CEO John Donohoe, who in a recent earnings call said merchants refer NFC “not for commerce.” And odd statement considering PayPal just dipped its toes in the NFC pool with support for Android.

Gajda tells is, “I think for some people NFC will replace the actual physical credit card but it will be a long time before NFC replaces all payments.” He believes that we are going to start seeing more traction by end of this year but says the capability of “taking credit cards and putting them on mobile phones will represent the long tail” in payments. But he adds, “the pieces are in place for NFC to take off.”

The second part of the Visa’s mobile strategy involves the digital wallet and the mobile web. Gajda says that as e-commerce ramps up on mobile phones, there is a need for one-click, simple username and password checkout experience in a transaction being made on a mobile device. That’s an area where PayPal has been working hard to dominate in but Visa sees room for other players. Should we expect a PayPal-like, one-click mobile payments technology coming from Visa soon? Perhaps, the company hasn’t been afraid to enter PayPal’s territory in the past, launching a peer to peer payments service earlier this year.

Gajda tells us that the biggest challenge of mobile payments in the current market the massive amount of fragmentation in the mobile industry. He explains that with all of the various mobile operating systems, specific manufactured phones, applications and more, keeping up with pace of innovation on the development side is a major challenge for Visa.

Visa actually tested a partnership with retailer The Gap earlier this year which alerted customers via SMS of discounts in stores near them. Gajda tells us Visa is working with a number of other retailers and banks on similar deals which will be announced soon.

Gajda says there are a number of other factors at play in the mobile payments place that need to be highlighted when talking about mobile payments. International is a huge growth area in mobile payments. He tells is that outside the U.S., there are a large number of people who have mobile phones but don’t have banking relationship or credit card. In fact, he says there are 2 billion people in world that have phone, but don’t have a bank account or credit card.

In these markets, Visa’s goal is to bring prepaid accounts, purchasing power and other financial services to basic phones. These could include topping up a mobile phone with airtime, buying transit tickets, peer to peer payments. And this goal was the mean reason behind the purchase of behind the $110 million purchase of Fundamo. The company’s platform delivers mobile financial services to unbanked and under-banked consumers around the world, including person-to-person payments, airtime top-up, bill payment and branchless banking services.

Connecting with the small business world that don’t yet use credit cards or are new to the system is another area where Visa feels there is strong potential, especially with mobile payments. That’s why the company invested in disruptive mobile payments company Square and took an advisory role in the company. Gajda says that the power of Square is that it is enabling small businesses and independent workers such as doctors, designer and other merchants to start using credit cards and grow their businesses. It would make sense for Square and Visa would somehow work to harness the power of their partnership (As of April roughly two-thirds of transactions using Square’s payments service were through Visa credit cards.), but it’s unclear what the two companies will reveal any new co-produced products soon.

MOBILE Gajda explains that there are three prongs to Visa’s mobile payments strategy. One of these is NFC, and focuses on payments using a mobile phone at a physical store. For background, NFC (near field communications) enables people to make transactions, exchange digital content and connect electronic devices with a simple touch. As we’ve seen with Google Wallet, Android phones such as the Nexus S are being built with NFC chips, making your cell phone a mobile wallet. Visa recently joined the ISIS network, a NFC mobile payment network that is a joint venture formed by AT&T, T-Mobile and Verizon. ISIS will soon launch in a number of markets, including Utah and Texas.

But he says that there is still so much room for innovation around how we pay with mobile phones. “With the rise of smartphone usage, we are already seeing a lot of innovation around commerce,” he explains. “It’s inevitable that this will extend to the payments around the sales in mobile commerce.”

DIGITAL Visa’s digital payments guru Schulz outlined her strategy for digital payments at the company, which centralizes around the creation of the digital wallet. Schulz says that because of the fact that e-commerce is being more easy and convenient with customers, especially with m-commerce, the underlying payments infrastructure has to evolve.

And Visa’s answer to this is a new digital wallet initiative. Here’s how it works. Users will have an account, and they can add their credit card numbers (and cards from other credit card companies such as American Express and Mastercard). Visa is partnering with a number of financial institutions to offer this product to their customers.

Users can also load their loyalty points and rewards cards, as well as organize their shopping lists. Schulz describes it as a “wallet in the cloud.” But she says the key to the success of the wallet is a seamless, one-click payments experience for the consumers. So Visa has partnered with a number of large-scale retailers (which will be announced soon) to integrate what Schulz refers to as a ‘new acceptance mark’ on a merchant payments page.

So there will be a button you can click on, which will prompt you to sign-on and then will sync your digital wallet with the purchase in your shopping cart. So for example, imagine you had a camera in your cart, and Visa offered a 20 percent off at camera’s purchased at BestBuy, the wallet would sync and show the discount in your cart. The same works for loyalty points and more.

Visa competitor American Express is also working hard to innovate both at the large retailer level, as well as among smaller retailers, with GoSocial.

She compares the digital wallet offering to “two-hand clapping.” ” You can have a digital wallet,” Schulz explains, “but you need a merchant solution of click to buy, and Visa’s going to transform that experience.” And Schulz highlights another recent acquisition, Playspan, has helping drive a simplified commerce experience, a.k.a. click to buy, within game or within app.

Of course adding another checkout experience to online retailers’ sites can be a complicated and time-consuming process. But that’s where Visa’s $2 billion acquisition of CyberSource comes in. CyberSource is said to process about 25 percent of all e-commerce dollars transacted in the United States, and operates e-commerce for hundreds of thousands of retailers. Schulz says this relationship has helped speed up the pace of implementation.

Creating the digital wallet, both on the mobile and web platforms, is no easy task. Visa has a name for itself in the credit card industry but the fact is that the brand still has to attach innovation to itself in order for people to take these products seriously. Perhaps that’s one of the reasons why Google’s Mobile Wallet news created waves, even though NFC technology is in its early stages.

Schulz explains that the idea behind the wallet is that consumers want control over their wallet and want to have payment information and access available to them at all times. She believes that the digital wallet will click to buy incorporated on retailers’ sites is essential to the future of e-commerce in both the U.S. and emerging markets.

While Visa, American Express and others are looking to capitalize on the changes taking place in the payments industry, it is a challenging effort. Local commerce is a big part of this, and everyone is trying to find a way to close the redemption loop. But e-commerce, amongst larger retailers, is also a multi-billion dollar market that Visa hopes to continue to play in with products like a digital wallet. And in-store payments, whether that be through NFC, Square or others, represent another market.

I’ve been talking to a number of executives of payments companies and founders of innovative payments startups, and while their objectives are different, they all seem to agree on one thing. It’s early and there is still much more innovation were going to see in the next few years in the online and mobile payments space.

Privately-held, Cape Town, South Africa-based Fundamo says it boasts more than 50 active mobile financial services deployments across more than 40 countries, including 27 countries in Africa, Asia and the Middle East.

Fundamo’s platform enables the delivery of mobile financial services to unbanked and under-banked consumers around the world, including person-to-person payments, airtime top-up, bill payment and branchless banking services.

The combined Visa Fundamo platform will add enhanced functionality and new services to existing mobile financial services subscribers for globally accepted payments solutions.

Fundamo’s deployments currently have a base of more than five million registered subscribers and the potential to reach more than 180 million consumers with mobile financial services.

Fundamo CEO Hannes van Rensburg and the executive team will continue to manage current and future Fundamo implementations as members of Visa’s mobile product organization.

Monitise and Visa, meanwhile, say they will debut a mobile banking solution in the U.S. for clients of Visa DPS, the company’s debit and prepaid processing platform.

Jumio is introducing three products for online merchants: Netswipe Start, Netswipe Scanning and Netswipe Processing. Additional products, including a mobile solution, will be released later this year.

The idea of processing digital payments by scanning credit card information isn’t entirely new, we should note. Last month, for example, saw the launch of Card.io, a startup that is developing mobile applications also capable of scanning credit cards using smartphone cameras, and some other applications like AisleBuyer include similar features.

Mattes posits that online retailers and e-commerce site owners can quickly and easily implement Netswipe on their websites, and that the solution doesn’t rival but instead complements existing payment solutions that have usually already been deployed (PayPal etc.).

Jumio says credit cards that are used to pay for goods and services via Netswipe are not ‘photographed’ – rather, the scans are made using videostreaming technology, which enables the company to recognize and verify the card details without storing any data on the client side.

The main benefits for merchants to implement such a solution are: reducing the time between a customer’s decision to purchase something online and effectively making a transaction, minimize the friction (entering credit card information by typing can be tedious and distracting) and reducing fraud.

Jumio CEO Daniel Mattes says that, during the pilot phase, a survey with a focus group showed a decrease in churn rate from 52% to 21%. This may well have been more of an exception than the rule, but for most businesses even a 5 percent decrease would have a big impact on the bottom line.

Netswipe will, howevever, allow merchants to securely process payments both on the Web and mobile – and like Card.io, Jumio intends to enable third-party developers to integrate the technology into their own apps and services. It’s also worth noting that Jumio claims its technology is patented.

If all this is true, the Netswipe technology solution is one hell of a unique selling proposition for everyone involved – little or no downside and a lot of upsides for sellers and an additional, convenient method of payment for buyers.

The proof of the pudding is of course in the eating, as they say, so I’d be very interested to learn from online merchants and e-commerce business owners what their thoughts on the new service are.

For example, Square will be adding in-depth merchant analytics to its iPad experience, allowing merchants to access information about which inventory is selling well, and what they can do to help make more money. Rabois tells me it’s about providing data insights from transactions and interactions, and giving these small businesses the tools that big businesses and retailers can afford. As for focusing just on the iPad, he says that if there is an Android tablet that has traction, Square will invest in a comparable Android tablet offering.

Another product area where Square will be continuing to focus its efforts is on Card Case, which is a virtual card case (via a mobile app) that consumers fill with ‘cards’ of all the merchants they visit and buy from who accept Square. These mobile cards include locations, merchant contact info, coupons, order and purchase history and more. Users can also use Card Case to ‘pay with their name’ and even enable hands-free payments.

Rabois explains that Card Case has seen major traction amongst consumers, and is on the same growth trajectory (in terms of usage and engagement) as Square was when it first launched to the public in 2009. One area where the startup will be innovating is personalization, and helping merchants to provide a more individual, personalized experience based on interactions to each customer.

As for transaction volumes, Rabois declined to give us any exact numbers but did say that transactions have hit way north of $11 million per day on a number of days in the past few months.

Armed with over $100 million in new funding, Square is also preparing for international expansion within the year, which was revealed at the time of Branson’s investment.

With the major product innovations set to take place this year, Rabois tells me that Square is also looking to triple its employee count in 2012. Currently, Square has a staff of 200 employees, up from around 40 at the same time in 2011. Most of the hiring will be of engineers, specializing in a variety of areas including iOS, Android, Ruby, back-end infrastructure and more.

In the end, Square’s 2012 goals are still aligned to the startup’s core principle: to help small businesses everywhere accept credit cards. Rabois says that there are still 26 million businesses in the U.S. that don’t accept credit cards, and he expects to convert a “huge fraction of them” this year. Stay tuned.

Sony's Xperia S will initially be available with the 2.3.7 version of Android Gingerbread OS at launch, with users being able to upgrade to Android platform 4.0 (Ice Cream Sandwich) during the second quarter of 2012. For reasons unknown, it will be joining an exclusive group of devices which only use a microSIM card, such as the Nokia Lumia 800 and Motorola Razr. This follows the original trendsetters Apple, and their devices. Also, there is no microSD slot; a feature, or lack there of, that many of the newly released handsets are keen to adopt.

As we saw with the marketing strategy of the Xperia Arc and Arc S, the company will probably be positioning the Xperia S just below the top devices, aiming to fill the niche right underneath the flagship products of Apple, HTC and Samsung. The ‘S' certainly packs some heavy hardware without overwhelming technical spec, and we believe the price will validate this theory.

The Xperia S will arrive PlayStation certified, with access to the PlayStation store and a fast-growing library of music and videos. Despite this, the real benefit of the phone are its ability to take high-resolution photos and videos, whilst being able to view them on the device itself. The idea is to better integrate smart devices, and for them to communicate intelligently.

Perhaps a tenuous example of this is the wrist watch worn by the spokesman for Sony Ericsson at CES, who could remotely control the camera and view messages on a tiny screen. It's therefore no surprise that the Xperia S comes with a built-in TV out function, where you can connect via HDMI and enjoy both pictures and videos on the big screen, and in glorious high definition.

This will be the inaugural handset, in the batch of the new Xperia NXT series - which stands for NeXT generation of smartphones. The Sony Xperia S has enjoyed no privacy since pictures were leaked back in early December, but it has now been confirmed that it runs from a 1.5GHz dual-core processor, a 12MP camera and a 4.3-inch screen that uses Sony's mobile Bravia engine.

Variants of the Xperia S are also set for launch in the springtime, when the Xperia ion, Xperia NX and Xperia acro HD will be released. The Acro HD will hit the Japanese market with specific features such as infrared port data exchange, mobile wallet and mobile TV.

In a video provided by PayPal, it shows how users will be able to walk into a store and check in to a location to unlock discounts and coupons. When a consumer goes to check out, he’ll be able to pay by entering his phone number. That leverages eBay’s purchase of Zong and its carrier billing capabilities, though it’s not clear how much easier or more convenient that is for consumers who pay with a credit card swipe. But it does open up the option to use carrier billing for physical goods in-store, which is good for people without a card, though the question of how large the transactions fees will be is important. Right now, carrier billing fees are still much higher than credit card fees, which might deter some merchants.

Users will also be able to scan items in-store and pay for them with PayPal without having to get in line. Customers can just flash their phone to an employee who will confirm the purchase. This is very much like AisleBuyer and it sounds like PayPal is looking to bring this to restaurant bills as well, something Thompson hinted at in his blog post. This is a cool step that makes sense for people who want to get in and out quickly.

Customers will be able to apparently pay ahead for coffee ahead of time and pick it up. Users will also be able to choose how they pay for something after the purchase with PayPal Credit, which seems to leverage eBay’s BillMeLater. All of this appears to work through PayPal’s mobile application and doesn’t seem to require any new investments by merchants. That’s a big concern for mobile payments built on near field communication, which requires many businesses to upgrade their point-of-sale terminals to handle contactless payments.

The new mobile payment tools don’t appear to include NFC payments. PayPal recently introduced person-to-person payments using NFC on Android devices, but the company told me at the time it was just focusing NFC on P2P payments. It sounds like PayPal is trying to work around the hardware constraints of NFC payments at point of sale.

Other shopping features on display included the ability to get push notifications for discounts that can be shared, which appears to build off eBay’s acquisition of WHERE. Consumers will also be able to scan an item in store and find inventory at other locations, something eBay got from its RedLaser and Milo pick-ups.

It’s unclear how soon all of this will come together and how many merchants will sign on. But providing a complete service for retailers and businesses to not only push out offers and discounts but also complete the transactions makes sense. Merchants can close the loop on transactions and understand how their marketing is doing. This is essentially what Google is trying to do with Google Wallet and Offers though it’s focusing primarily on facilitating targeted marketing, rather than taking a cut of transactions.

PayPal’s payment initiative is part of eBay’s broader commerce platform called X.commerce, which it’s building off the acquisition of Magento.

But there’s also a lot of questions to be answered. For instance, will consumers find this more convenient than a card swipe? Will PayPal make it any easier for people to set-up and manage accounts? Do all of these parts work well together in one solution? And how aggressive will PayPal be in selling this to merchants and consumers? I’ll be interested to hear more and I think PayPal can be a big contender if it gets its execution right. This is going to be a big market but it will require not only great tools but a lot of smart selling to consumers and merchants.

Listrak sampled Internet Retailer's Top 1000 online retailers, loading up carts and then abandoning them ("Hey you kids! Knock it off!") to see who would follow up. Only 14.6% sent a follow-up email, and fewer still sent a second or third email which, Listrak's CEO Ross Kramer told Internet Retailer, is where about half of the revenue comes from. Among Listrak's suggestions to retailers: get the shopper's email address first.

Intuit cuts payment rate for AT&T subscribers Intuit announced a partnership with AT&T for its GoPayment mobile payment solution, which competes with Square. Like Square, Intuit offers a free card-swiping attachment that plugs into the audio jack of an iPhone, iPad, Android or Blackberry device, allowing anyone to collect credit card payments. Intuit's basic rate of 2.7% slightly undercuts Square's 2.75%, but AT&T customers will pay even less (1.7%). Intuit originally charged customers $175 for the swiper dongle, but last January, in a bid to compete with Square, it began offering the dongle for free. Still, Intuit has struggled to gain the visibility that Square founder Jack Dorsey and COO Keith Rabois and high-profile investors like Richard Branson have brought to Square. This week's deal with AT&T is a reminder that Intuit is serious about GoPayment, which may actually offer more to merchants since it integrates with QuickBooks, its bookkeeping package that also targets small businesses.

PayPal embraces NFC (just a little) PayPal has made something of a point of not jumping on the NFC bandwagon, emphasizing the technology-agnostic nature of its mobile payments platform. Demonstrations at PayPal's recent Innovate conference emphasized payment options like PayPal's Empty Hand system, which lets you buy things with only your mobile number and a PIN. Still, NFC seems an inevitable part of the payments picture in the years ahead, and this week, PayPal delivered the peer-to-peer NFC payment technology that it promised last July. Shimone Samuel, Product Experience Manager for PayPal Mobile Applications, wrote on the PayPal blog that the technology for NFC P2P is included in version 3.0 of PayPal's Android app. No need for it in the iOS app yet, obviously, since the most recent iPhone upgrade disappointingly didn't include support for NFC. As we noted back in July, in practice, the transfer of funds through PayPal's NFC system isn't substantially different from what was already possible using Bump, which sends the transfer through servers in the cloud rather than wirelessly between the mobiles. But the NFC system will let PayPal developers acquire experience with NFC wireless transfers, which should serve them well as NFC-enabled point-of-sale terminals begin to show up next year and beyond.

The app also includes traditional and social sharing capabilities. You can the send ecards as well as holiday offers from Starbucks, among other things.

The object, says Alexandra Wheeler, vp-global digital marketing for Starbucks, is to “surprise and delight” customers during the holiday season.

Although Starbucks experimented with an AR app years ago in an ad, Wheeler says this is the first major AR push by the company. The effort follows some other recent AR programs from marketers including an app from Nivea featuring Rihanna and an Amazon app that lets you point your phone at objects and then buy them.

Cup Magic, created by Blast Radius, caps off a year of successful mobile implementations by Starbucks. The brand launched a mobile payment app in January that has been used in more than 20 million transactions and a QR code program designed, like Starbucks Cup Magic, to enhance the in-store brand experience.

American Express recently took the spotlight when the company signed a deal with Verizon Wireless allowing mobile users to make purchases on Verizon devices using a streamlined process. As the largest U.S. wireless carrier, Verizon reaches a broad audience. The partnership comes at the right time as American Express opens its own digital payment software called Serve, which will come pre-installed on all Verizon smartphones and tablets.

In an apparent bid to boost sales of Android phones, Google launched Google Wallet, a mobile payment platform for Android users. How it works: Google's Android platform will support NFC technology (more on that in a minute) capable of turning your phone into your wallet, letting you store digital credit cards on your Google Wallet account. Just walk into a store, pick up a product, and tap your phone on the payment reader. Google's service will support the payment networks of Citigroup's (NYSE: C  ) Citi, MasterCard (NYSE: MA  ) , and First Data.

eBay's (Nasdaq: EBAY  ) PayPal has dominated the online payment space for over a decade, but as the competition gets tough and the focus shifts to mobile devices, the company will need to make big moves to maintain its head start. One such move was initiating Titanium+Commerce, a mobile payment program that lets small businesses design their own smartphone apps for processing PayPal transactions.

Another emerging competitor in the mobile payments space is ISIS, a mobile commerce network founded as a coalition among AT&T (NYSE: T  ) , Verizon Wireless, and T-Mobile. Similar to Google Wallet, ISIS will run on any NFC-enabled device offered by the three carriers. Payment network partners will include American Express, Discover, MasterCard, and Visa (NYSE: V  ) .

Why this will workFor one thing, smartphones have conquered dozens of industries by gradually replacing everyday items like pocket calendars, road maps, and cameras with their ever-evolving apps. I have no doubt the move to mobile payments will quickly make credit cards a thing of the past. Who will finish the race with the most market share? The company that can get the most merchants to adopt its service. At this point, ISIS shows the most promise because merchants will benefit from a solution offering multiple wireless carriers.

The updated Android app also includes a few non-NFC features, including a newly redesigned landing screen, auto-complete from your phone’s address book and other UI improvements

A couple of months ago we wrote about a pilot program at Arizona State University gives students NFC-enabled phones that can be used to access dormitories and university buildings. At the time we said that this is the perfect place for the widespread use of NFC to start: universities have long been known to be the birthplace of behavior-changing trends.

Let's look at the NFC Coca Cola machine. This is actually the second time that we have run across one of these prototypes (note: we were not at ad:tech this week but found this story from Mobile Commerce Daily). The first time we saw one of these Coke machines was at a reception around mobile payments from MasterCard in New York City a couple of months ago. It functioned just like any other Coke machine, except it accepted money through NFC. Make your selection and tap on the receiver instead of digging through your pocket for change.

"The combination of mobile commerce and location technology moves our business from the point of sale to the point of thirst," said Wendy Clark, SVP of integrated marketing communications and capabilities Coca Cola according to Mobile Commerce Daily. "We have to place bets and we have to take risks if we want to feel innovation in the way that we market."

We may see groundswell coming from the big brands that are looking to change how they interact with customers. NFC is not going to be adopted because the big corporations like Google make partnerships with other big corporations in the mobile and financial worlds and all of a sudden we are going to change how we go about our day-to-day lives just because they tell us so. The act of buying a Coke is one of the simplest and most straightforward acts in all of society. If you see that your friend just paid for a Coke at a vending machine with her smartphone, you are much more likely to go, "hey, I wonder if I can do that to." Once you have your foot in the door, you are more likely to use that process again.

Adapting Technology To The Situation

During Nokia World in London I met a developer that wanted to explore NFC because his father has Alzheimer's and he wanted to figure out how the technology could help him give his father a way to manage his day-to-day life. For instance, setting timers on items around the house to keep his father from doing odd things at odd moments, like opening cabinets in the kitchen at 4:00 a.m. or leaving the house at the same time and wandering the neighborhood, not knowing where he is going. If his father has a watch with NFC in it, he could program those household functions to only respond to the NFC timer at certain times of the day.

Think of it: this is how NFC will evolve. Consumers are not going to be bludgeoned from on high by companies like Google, Sprint and MasterCard. It will start as a groundswell where developers see a problem, solve a problem. Big brands, like Coca Cola or Wal-Mart, will start instituting NFC solutions and people will become familiar with the technology first. It is one thing for Google to have a big demo, roll out a bunch of partners and say "this is the future." It is another for people to actually have the technology in their hands, using it to do a variety of activities.

Even the Google Wallet competitor, ISIS, thinks that competition is good for the realm. In an interview with CNET, ISIS CEO Michael Abbott said, "competition is what this space needs." Why would he say something like that? Because Abbott understands that people learn from other people and that the more solutions there are out there for people to see the technology in action, the more will ultimately adopt it. Competition drives innovation and better products in consumers' hands. In that way, the technology adapts to the situation, not the situation to the technology.

an article written by Chess Media Group principal Jacob Morgan

Morgan noted that while none of the participating organizations were able to offer a projected ROI, all agreed that enterprise collaboration technologies solved business problems, and that doing so was a good enough reason to make the investment.

report titled "Social Business Systems: Success Factors for Enterprise 2.0 Applications." According to the survey, which was sponsored by a group of 20 companies that sell social software, just 12 percent of organizations must make a financial business case for social business investments, down from 20 percent in 2010's survey.

27 percent said social applications were considered part of the infrastructure, in much the same way as email or teleconferencing, up from 12 percent last year.

In my interview with AIIM President John Mancini about the survey, he told me social technologies were becoming "the digital dial tone for organizations." He said:You wouldn’t have to do an ROI analysis for your email system. These types of systems are going to be adopted in some way, shape or form by most organizations. They decide, “We need this capability. It should be a platform. It’s going to be a core infrastructure.” Then they figure out how much they want to spend. You don’t go through the kind of elaborate analysis you do for other systems, including content management systems, which AIIM does a lot of.

Williams said the department store chain would “love” to run a trial next year if all the participants needed to make mobile payments work – such as the banks and mobile operators – come together.

Research by PayPal said that 2016 will be the year when UK shoppers will use their mobiles to pay for their shopping, increasingly replacing cash and cards.

Robin Terrell, House of Fraser executive director of multi-channel and international, said payment through the mobile phone will “absolutely” be introduced in the future.

However, retailers have voiced their concerns over the difficulties in ensuring all the various players work together on NFC technology.

“As a customer, I am not going to have a different wallet for each financial institution, network and handset I have,” said Terrell. “Equally, the financial institutions will need to work together to raise the current £15 limit on NFC contactless payments. None of these issues are insurmountable, however, and the overall direction of travel is clear.”

Just this week Starbucks said that it is launching the high street’s first iPhone mobile app payment system after growing impatient with the rate of development of NFC technology

The coffee chain said it “did not want to wait” for the development of NFC and for it to become mainstream. Instead, it has developed its own mobile payment system using iPhone apps because so few handsets are currently NFC capable.

French Connection said mobile payment was not on its agenda just yet but it could see the method being taken up in the future.

Jennifer Roebuck, French Connection’s digital director, said, “There’s no reason why in five years you can’t swipe your mobile to pay for products. It’s too early days for us [but] it is logical, everyone uses a mobile for everything, such as shopping with Ocado. It’s becoming a little mini system to make payments.”

David Smith, IMRG chief marketing and communications officer, said, “The use of smartphones is going up and more technology that goes into them so the compatibility is not beyond it. But consumer trust and how quickly retailers have a system that’s foolproof are the biggest factors. It will inevitably come but how big it will be remains to be seen.”

Customers also need an Orange credit card, Barclaycard or Barclays debit card to transfer money onto the Quick Tap app.

Barclaycard is touting the system as highly secure, highlighting the fact that users can opt to input a PIN every time they make a payment.

Using mobile phones to make payments is a natural extension of the smartphone, according to Pippa Dunn, vice president at Orange.

"We no longer use our mobile phones simply for talking and texting. Apps, cameras and music players allow us to use them for a lot more," she said.

"Orange Quick Tap is the first of its kind, a service that allows you to pay for everyday items just by tapping your phone wherever you see the contactless payment symbol. It's going to start a revolution in the way we pay for things on the high street."

Carolina Milanesi, research vice president at Gartner, told V3.co.uk that this will be the first of many services as near-field communication (NFC) technology becomes a common feature on Android, BlackBerry and possibly Apple devices.

"[However], a little more work needs to be done on the service side as there are different kinds NFC approaches being used by the providers," she said.

There are currently 12.9 million contactless cardholders in the UK, and Barclaycard expects the new service to drive adoption.

O2 is gearing up to introduce NFC services during 2011, including a wallet application and direct-to-bill and peer-to-peer payment facilities.

Analyst firm Juniper Research predicted that NFC will be built into one in five smartphones by 2014 as mobile payment and interactive promotions take off.

Over 23 million NFC-capable smartphones are expected to be in circulation by the end of 2011, according to Juniper.

The technology is predicted to generate high revenues, explained Howard Wilcox​, senior analyst at Juniper Research.

"NFC-based services in North America will account for nearly $47bn, or 41 per cent of the total, by 2016. The Far East and China ($31bn or 27 per cent) and Western Europe ($23bn or 20 per cent) will follow," he said.

However, Wilcox warned that there are still significant infrastructure challenges, and institutions including banks and merchants will need to have sufficient point-of-sale readers installed.

The Google Nexus S was the first smartphone to ship with NFC technology, but the hardware has seen limited use in the UK so far.

Google is to start trialling NFC services in US this summer, and O2 is expected to roll out a mobile wallet application in the UK this year.

RIM has also backed the technology, and its forthcoming high-end devices, including the BlackBerry Bold Touch, are expected to ship with NFC.

HTC, meanwhile, has taken a more cautious approach, stating that it will incorporate the technology once there is established demand.

The iPhone 5 was tipped to feature contactless payment, but the latest reports suggest that Apple will omit NFC from its fifth-generation iPhone.

The GSMA has published interoperability standards for SIM-based NFC application programming interfaces (APIs) and protocols based on the Pay-Buy-Mobile specification for secure NFC mobile payments. Such standards pave the way for the development of contactless services across a variety of devices irrespective of their operating system (OS) while providing more detailed implementation protocols for the Java and Android platforms.

IHS Screen Digest research indicates that the 45 operators involved in the announcement serve 50.7 per cent of the world's mobile subscriptions. Since the NFC module is embedded in the SIM card, the operators expect users to be able to use existing handsets for contactless services without the need to switch to a high-end smartphone. Users of smartphones currently lacking NFC capabilities will also benefit from this technology.

The large existing user-base of low-cost, mid-tier, NFC-less feature phones popular in emerging markets is a prime target for this technology. However, technical difficulties have prevented the adoption of SIM-based NFC. As the SIM card slot is located behind the battery, radio signals to and from the NFC module are effectively blocked in many phones.

There is also the issue of cost. IHS Screen Digest estimates current SIM-based NFC modules to be a hundred times more expensive than traditional SIM cards. This would deter most operators from venturing into offering SIM-based NFC as an option to customers in emerging economies until economies of scale bring the associated costs down.

It is unlikely that operators will allow third-party "over-the-top" services outside of their value chain. As the implementation of some contactless services (e.g. mobile payments, public transit) depends on a close collaboration between operators and local third-parties, it is expectable that contactless services deployments and uptake will vary greatly across markets.

IHS Screen Digest does not foresee rapid adoption of SIM-based NFC mobile payments. Users will likely become acquainted with the contactless technology by way of other use-cases, as NFC experiences in Asia and Europe suggest--most notably the Octopus transit and stored-value card in Hong Kong, and the London Oyster transit card.

If NFC payment and transit cards schemes prove successful in more locations, the likelihood that such services will be increasingly incorporated into mobile devices will also increase.