Visa: Mobile payments will hit mainstream in 2 to 3 years

There's still a lot of work to be done to get consumers aware of the benefits of paying with a smartphone, the head of Visa's mobile business tells CNET.

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Bill Gadja, head of mobile for Visa, makes a payment with his Galaxy S3 at the Olympics. Visa

That vision of paying for goods and services with your phone anywhere you go? You shouldn't hold your breath.

While there are trials and select deployments of payment terminals and cash registers that can accept mobile payments, the method won't hit the mainstream in the U.S. for another two to three years, according to Bill Gajda, head of mobile for Visa.

"We're seeing momentum in 2013," Gajda said in an interview with CNET. "But it's really about commercial launches and scale."

Visa has been one of the bigger companies spearheading the idea of mobile payments -- where consumers can tap their phone in front of the cash register or payment terminal to pay for groceries, a taxi ride, or other things.

Visa is using the Olympics as an international showcase for mobile payments. The company has hooked up 140,000 payment terminals in London with near-field communication, or NFC, chips that enable the tap-and-pay process. The locations include 5,000 London taxis and 3,000 point-of-sale venues at the Olympics. The company is handing out several thousand Olympic-edition Galaxy S3s to VIPs such as athletes to test out the service.

Still, Gajda's more realistic view of the broader acceptance underscores the difficulties in changing long-drilled consumer habits and getting past the comfort level of paying with cash or swiping a credit card. Still, the market potential of a mobile payment, and the ability to deliver more services and to target advertising, has attracted several heavy hitters.

Google Wallet, which was unveiled more than a year ago, has seen only limited adoption, with a recent CNET test of the service yielding mixed results. The other major venture, Isis, is backed by AT&T, Verizon Wireless, and T-Mobile USA, and is expected to start trials as soon as August, CNET has learned.

But the problem with getting things moving is twofold: hardware and customer awareness. On the hardware side, payment networks such as Visa and MasterCard are pushing to enable NFC in more terminals, which are built by manufacturers such as Verifone. Despite a vow to get NFC into newer terminals, the transition depends on how fast retailers are willing to upgrade their point-of-sale terminals.

London and the Olympics offer a good opportunity for Visa because the U.K. is ahead of the U.S. in terms of percentage of terminals hooked up with NFC and able to accept mobile payments. But in the last nine months, the number of NFC-enabled terminals in the U.S. has grown to 400,000 from 120,000.

"We are really starting to see momentum behind it," Gajda said.

NFC has also been slow to show up in smartphones. Some phones, including Google's Nexus S and Galaxy Nexus, Samsung Electronics' Galaxy S3, and several BlackBerrys, incorporate NFC. Apple's iPhone, however, does not yet use the technology.

There also needs to be more customer awareness of the benefits of mobile payments. Credit and debit cards offer a quick and convenient method of payment, and mobile payments need to take it a step further in terms of speed and value to get consumers to notice.

It's all about getting consumers to recognize the benefits that come from having receipts; multiple credit and debit cards; and coupons and discounts stored in the phone, Gajda said.

And customers need to learn that paying with a phone is just as secure, if not more secure, than using a credit card.

"When it works, we get a lot of positive feedback," Gajda said. "But there's still more work that needs to be done."

Corrected at 3:05 p.m. PT on July 25: This story incorrectly referred to Payfone as a manufacturer of point-of-sale terminals. The actual payment terminal company is Verifone.

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