As exciting as the prospect of being able to pay for dinner by bumping your cellphone into your waiter’s iPad is, it’s important to take futurists’ wild predictions with a grain of salt. No one has a crystal ball, after all, but most of us do have fully-functioning wallets — armed with paper that magically stores value based on what is drawn upon it, and cards that can tap into far away computer systems using the magic of magnetics and fiber-optic networks. This might be the exact problem with mobile payments, according to Dr. Fumiko Hayashi, an economist at the Federal Reserve Bank of Kansas City.

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Hayashi spoke with recently about the “chicken-and-egg problem” that mobile payments adoption faces in the United States. The concerns she points out dovetail with some of the shortcomings in the mobile payments field that we’ve pointed out in the past. It’s nice to see someone smarter than you, who really knows what she’s talking about, confirm your hunches.

In the first quarter of this year, Hayashi wrote a paper for the Kansas City Fed called “Mobile Payments: What’s in It for Consumers?” In the paper, she argues that “the main demand-side barrier [is] the uncertain value of mobile payments to U.S. consumers.” While Kenyans, who lack access to banks, have found value in mobile payments provider M-Pesa, and Japanese adoption was fueled by adoption in mass transit, “neither factor is as important in this country,” writes Hayashi.

Payments technologies and currencies, though we may not always realize it, operate according to the same laws of supply and demand that other consumer products do. This is easy to forget, especially because as consumers, we express our demands using these things. But just like any new trinket or doohickey or thneed must, in theory, be something that consumers want or need in order to thrive, so too must payments systems. Debit cards made it easier for people to stop carrying so much cash, while avoiding the pitfalls of credit card use, and slowly became an incredibly popular form of payment. But mobile payments, for the most part, will just keep us from needing to carry debit cards, and debit cards are both a.) relatively new and b.) not all that burdensome.

Hayashi elaborates on her points for PYMNTS:

It is difficult to find “killer apps” in the U.S. In other countries where mobile payments are more popular, there are killer apps that have resolved pain points for consumers…compared with these countries, the U.S. payments system works well and pain points for consumers are relatively minor. This may impede a rapid transition to mobile payments in the U.S.

And furthermore, there are significant supply-side issues facing mobile payments platforms, which feed into demand-side issues, which then feed into one another in a vexing cycle:

For example, agreeing on which mobile technology standards to adopt is a supply side barrier, but it significantly affects the main demand side barrier – uncertainty about the benefits of mobile payments to consumers. Some of the important mobile payment attributes, such as convenience, speed, and security, depend on the technology standards. Because of the lack of clear direction about these standards, consumers may not know what they can expect from mobile payments. Suppliers of mobile payments, on the other hand, may want to determine which technology to adopt after knowing consumers preferences or needs. But it may be difficult for consumers to express their wants or needs without knowing what mobile payments are capable of. It is really a chicken-and-egg problem.

Overall, however, Hayashi thinks that “mobile payments have a lot of potential,” but that one technology will have to be agreed upon for widespread adoption to actually happen. The Kansas City Fed, like all regional Fed branches, processes checks for banks in the area. They ought to know something about payments acceptance. Checks have probably worked so well for so long, in part, because all you need is a pen and some checks, and checks don’t come in a variety of inscrutable technologies with varying degrees of security flaws.

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