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Mobile Phones Closer To Becoming Full Digital Wallets, Cows Rejoice

With a new mobile payment program from PayPal and the rise of near field communications-enabled phones in developing countries, cell phones are quickly becoming the method of payment du jour. But will they ever really replace the cowhide in our pockets?

PayPal is launching an enhanced Mobile Checkout program today and I can hear the cautiously mounting cheer from cows across the world. More digital wallets in the form of cell phones means fewer wallets made from leather. Cows are likely the strongest lobby out there in support of mobile payments (alligators are probably not that far behind).

The new service will let people visit merchant Web sites on their cell phones and buy things by clicking on PayPal buttons that will be embedded in the mobile sites. Though the initial set of merchants supporting the program is somewhat limited, it is sure to grow.

"Millions of consumers have chosen PayPal because it offers a safer, easier way to pay online," said Kevin Dulsky, senior director of PayPal Mobile in a prepared statement. "As the mobile commerce market grows as an extension of ecommerce, it will be critical for online merchants to adopt a secure mobile payment platform to reach new consumers and to remain competitive in the market." The program is possible with the contributions of CardinalCommerce, GPShopper and mPoria.

Mobile payments to merchants are one step. But peer-to-peer mobile payments are also on the rise. New research from Juniper Research predicts that P2P payments will amount to $22 billion in the next four years.

PayPal had launched an SMS-based mobile payment program (different from the new program) in April of 2006, and SMS is what will power mPayments.

The mPayments program, which uses NFC technology, is set to launch in 2009. The goal of this program is to provide better banking options to people in developing countries, but there is definitely potential for the enterprise in developed countries as well. Enabling mobile payments for the field force set could allow companies to invoice and collect payments immediately for services rendered rather than after the fact. Speeding up the invoice and collections process is always a good thing.

Juniper Research report author Alan Goode noted, "The technology is available now to enable secure and fast payments to be initiated on the mobile phone. The business model stills needs some work but there are positive signals emanating from the industry that will create considerable revenue for all parts of the ecosystem. I am cautiously optimistic for the future success of mPayments."

So are cows.

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