In my time delving into the mobile wallet industry and attempting to predict its destination, I have remained skeptical that the American consumer is ready to begin using their phones in place of plastic. There is not yet a compelling convenience boost or other incentive to convince most consumers to replace their plastic cards with a mobile application. With the exception of Starbucks and other pockets of curiosity, mobile wallet is a fun toy but it is not a tool most American consumers are eager to utilize.

While my skepticism regarding the adoption of mobile wallet remains firmly in place, it is becoming increasingly obvious that the American small business, and the vendors providing small business payment solutions, will lead the mobile wallet revolution (much like the Diners Club evolution in the 1950's, an industry the banks soon captured). All indications are that PayPal, Google Wallet and others are making their plays in the small business community while banks and major retailers take different paths, follow the leaders, or simply watch the proceedings.

While several mobile payments companies are innovatively targeting small businesses, many more established firms are finding it difficult to provide a technology solution to their customers. One example of innovation in the small business arena is Square's fully-functional "cash register," which enables mobile payments while providing businesses alternatives to banks and card merchant processors. However, while some larger retailers have dabbled with mobile payments, there remain significant barriers to mass adoption. The most significant of these barriers to entry includes the investment that these established businesses have already made in card payment processing hardware and their accompanying multi-year, locked merchant processing contracts. The cost of replacing the status quo to get on board with mobile payments is simply not rewarded with a sufficient-enough benefit for these retailers. Additionally, retailers remain unwilling to expose customer and transaction data details to mobile wallet providers.

Merchant Customer Exchange (MCX) is a consortium of thirty-five of the largest retailers in the U.S., including Wal-Mart, Target, and 7-Eleven. According to a recent MobilePaymentsToday article, the direction of MCX is, understandably, focused on the best interests of those retailers. Near Field Communication (NFC) and other 21st century technology will be eschewed by MCX in favor of barcodes as the primary interaction method between the consumer's mobile device and the retailers' POS terminals. Thus, no hardware investment or infrastructure modification is required. Participating merchants have agreed that customer and transaction data will remain property of the merchant. Consequently, MCX will satisfy retailers' needs, but the planned solution offers little incentive to the consumer to give up plastic. Therefore, several questions still remain including, "Are consumers willing to operate with two or more Mobile Wallet mechanisms?" and, "Can one vendor merge NFC and barcode solutions into a seamless consumer experience?"

By no means is the competition for the consumer's mobile wallet over. While PayPal, Google Wallet, Square, and other technology-savvy providers (we include ISIS, with its bank partners, in this group) are working with small businesses on the forefront of mobile wallet, there is still an opportunity for banks, credit card associations, MCX, and other large retailers to offer a more compelling solution to retailers and consumers. Until they do, these established firms will simply be following the more nimble leaders in the mobile wallet space as they capture the hearts, minds and dollars of the consumers while working with dry cleaners, nurseries, restaurants, and art galleries…one mobile swipe at time.