As smartphone adoption skyrockets, consumer behavior is shifting more toward mobile-based actions for everything. One of the latest hot topics when it comes to consumer behavior is how we have started to use our mobile phones for commerce and, more specifically, as a payment solution.

Google, Apple, Paypal and even traditional credit card companies such as MasterCard, have all developed their own mobile payment products, making significant strides toward changing how consumers pay for everyday goods.

However, no one has really cracked the code on what the best solution is for mobile payments.

Chips down
We not only have to consider issues such as wireless carrier, retailer and consumer adoption, but we also need to determine which technology is best and safest.

Until we have a mobile payment solution that provides consumers with a sense of true security, reduces barriers to entry for each player in the larger mobile commerce ecosystem, and is easy for retailers and carriers to get behind, we will have to keep searching for a solution.

Let us take a look at the current landscape to try to make sense of mobile commerce today first by reviewing the technologies that power mobile commerce, and then exploring the current products we can use.

There are three main technologies that are used in mobile commerce: NFC, GPS and standard bar codes.

NFC, which stands for “near field communication,” uses radio waves to send payment information from one device to another. It is specifically designed to work over very small distances – only a few centimeters – to avoid the POS (point of sale) terminal from recognizing users for reasons other than a transaction.

While this is a benefit, it also means that the consumer is invisible until he or she is paying for something. Vendors have no way of knowing if a loyal customer, or any potential customer for that matter, has entered their store.

If merchants were aware of consumer presence earlier, they could send promotions or coupons directly to the consumer, increasing the likelihood of them making a purchase.

This is where GPS has a leg up – it uses location-aware functionalities found within our phones to establish a connection between a consumer and the store.

With this, vendors can alert consumers to special offers nearby and specific stores can be alerted when loyal customers walk in their doors.

Also, there is no additional equipment needed – location-based technology is found in all phones, whereas NFC is not.

Then there are bar codes, which are the most familiar to us.

Used by players such as Apple, a bar code will appear on your smartphone screen and customers simply scan their phone to make a payment.

If you head out to Starbucks for an afternoon coffee break, you will likely see a few customers paying this way.

The issue with NFC is adoption.

Leading up to the iPhone 5 launch in September, rumors flew that Apple planned to incorporate NFC into the new devices.

However, we now know that Apple made the decision to leave it out and stick with Passbook, an app that compiles all of our coupons, promotions, loyalty cards and more into one easily accessible place.

Apple isn’t the only one to leave NFC out of the mix – the leading mobile carriers, Sprint excluded, have joined together to create an NFC alternative called ISIS, and have forbidden the activation of NFC in any of the devices that operate on their networks.

Getting carded
Recently, Google Wallet launched the “Google Wallet Card,” which was a big surprise to the industry as many originally thought that the key aspect of the digital wallet offering was its solution to the problem of carrying around a traditional wallet filled with cash and credit cards.

While it was a departure from the vision of a “cardless” future, it is also indicative of the larger issue.

The card is Google’s strategy to get around the carriers and embed the NFC technology into this card instead of relying on a smartphone.

Consumers are still able to have the same experience of checking point balances and perform other tasks on their phone, without Google needing access to the phone’s chip.

But if we are moving toward a digital wallet, is providing another physical card to carry around really a step in the right direction?

Looking at the options that are currently on the table, ISIS, the joint venture between AT&T, T-Mobile and Verizon, seems to be the most viable contender for long-term success.

It is a mobile app that allows users to store their credit card information and then simply tap their phone to the POS to make a payment via NFC.

This app not only stores your Amex, Visa or other credit card information, it can also store debit cards, reward cards, discount coupons, payment coupons, tickets and transit passes.

As the venture has broad carrier support, ISIS has a leg up on Google, which is offering a similar solution.

Dealing with it
The platform, technology or product that is most likely to succeed is the one that is most easily adoptable by all parties involved in the ecosystem.

For those of you who just got a new smartphone, you are likely blown away by the ease of use and how highly intuitive it is to use it – even a four-year-old can figure it out.

The same must go for mobile payment solutions, but they also must incorporate the features that we are used to being able to access on our desktop computers: the deals and promotions, especially when they are becoming increasingly popular mobile marketing tactics.

But it is still early and we are still in the stage of warming up consumers to the idea that commerce can truly be mobile-based.

It will take some time for consumers to feel comfortable to leave the house with just their phone, knowing it can act like their wallet as well.

While Passbook has taken a great first step as it will help us get used to moving many of the non-transactional cards into the digital wallet, the long-term solution must have three components: phone integration and carrier support, point-of-sale integration and a compelling reason for consumers to make the switch.

ALTHOUGH MANY new providers are delivering solutions to the phone – and some even the POS terminal – the real question is, “Why will the consumer switch?” And, it still remains murky.

What we need is an infrastructure that rewards consumers for using the transaction technology, and that automatically ties in loyalty cards and points data. While ISIS appears to have the best chance, only time will tell.

David Wachs is senior vice president of mobile at ePrize, Chicago. Reach him at [email protected].