Nacha: a taste of the mobile-payments future

Mobile payments will spawn big innovations, including person-to-person transactions.

[Editor's note: This story was changed to emphasize how mobile payments could change consumer transactions.]  

Imagine you're sitting at a restaurant figuring up who owes what. Instead of reaching for cash to pay your part, you pull out your iPhone or BlackBerry and send money to your friend's smartphone electronically. Individuals, not just businesses, will be able to accept your smartphone transaction.

"We're seeing more and more interest in person-to-person payments," says George Throckmorton, senior director of NACHA, the not-for-profit association that oversees the US electronic-payments system. "P-to-p," or person-to-person, "will be the top use" of mobile payments.

There are still issues to be worked out, especially involving security. Units can be easily lost or stolen. There are all the challenges of an online environment. This week NACHA warned in a statement of a fraudulent spam message that has been making the rounds.

But there's no technical barrier that looks likely to stop the wave of new mobile-buying applications, Mr. Throckmorton says. Interest in mobile payments is so strong among banks and retailers that NACHA has proposed tweaking its electronic-payments rules to include mobile applications. Originally, comments were due Oct. 16 but the association has moved that back to the end of the year.

Here are four top uses of mobile payments, according to Throckmorton:

4. Authorize electronic payments.Your bank sends an e-mail saying your electric bill is due today. You reply via smartphone to allow the transaction.

3. Online purchases. Your favorite store has just gotten an item you've inquired about. It sends an e-mail with a button that allows you to buy it immediately, wherever you are.

2. In-store buys.You show up at the counter and use your cellphone or smartphone instead of a credit card to make the payment.

1. P-to-p transactions.These could be person-to-person or person-to-business transactions, just as many eBay purchases are made today. In the new world, though, you won't be tethered to a computer. All you'll need will be a smartphone.

"We're right on the cusp of those things showing up," Throckmorton says.

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