Google Wallet
Introduced six months ago, Google’s app uses NFC enabled phones (see sidebar) to communicate with PayPass payment terminals. The app holds offers, loyalty cards, and credit cards, and lets you choose the payment method.

Citi originally partnered with Google on the launch and you can use the bank’s MasterCard or load a Google prepaid card from your favorite credit card. Visa became an option soon after. Google intends to make its money from the ads or offers it pushes to the device, leaving the transaction revenue alone. The only phones this NFC-dependant solution works with today are the Samsung Galaxy Nexus and Nexus S. The app is locked with a PIN for security. Aiming to be a complete solution, Google plans to let you load boarding passes, transit cards, tickets, and more in the future.

FIS/Paydiant
On January 26, FIS, the world’s largest provider of banking and payments technology, announced a new mobile solution. They have partnered with Paydiant to provide a solution that works with existing technologies, phones and terminals, and allows for expansion when NFC phones become common.

It’s a downloadable app that works with existing smartphones and allows point of sale and online purchases. The product can also be built into a bank’s existing app to offer a branded, seamless mobile banking and purchasing solution. Instead of relying on NFC technology, the FIS solution uses a QR code which most POS retailers can accept today. Starbucks uses this technology for its loyalty cards. (See sidebar.)

Now, this option would seem to be the most promising for banks and credit unions simply because it doesn’t put another party between the financial institution and its customer. There’s a bit more information at Paydiant’s website.

ISIS
A joint venture between Verizon Wireless, AT&T, and T-Mobile. Before launching their solution, ISIS is busy cementing partnerships with phone makers and phone companies. From their website: “The Isis™ mobile wallet will eliminate the need 
to carry cash, credit and debit cards, reward cards, coupons, tickets and transit passes, fundamentally changing how you shop, pay and save. All with your phone.” This promotional video imagines a complete solution.

Those are just four of the many players in this evolving, crowded market.

WHAT IT MEANS TO COMMUNITY BANKS AND CREDIT UNIONS

The traditional revenue sources for checking accounts — overdraft and interchange fees — took a beating in the past two years with the enactment of Reg. E and the Durbin Amendment. Will mobile payments further erode those income streams? While it’s too early to tell, one scenario gives merchants more control over which payment method a consumer chooses, based on the most friendly interchange fees for the merchant. Also, the possibility of choosing delayed payments (PayPal) versus overdrawing means banks may have to offer some form of instant credit to capture some of that revenue.

But new income streams could open-up for banks and credit unions. Peer to peer payments via mobile phone, something that today is most often done with cash, mean more transactions on an account and the subsequent fees. Google’s business model looks to be in the coupon realm — revenue from advertisers. It’s not a stretch to envision financial institutions also serving up advertisements to their customers through their mobile apps and receiving revenue for doing so. Those advertisements could have more relevancy based on a customer’s buying habits, which a bank knows, and further, could be geo-based, e.g., serving up a coupon to McDonald’s when the consumer is within a half-mile.

Like many companies in this new century, financial institutions will come to realize the most valuable asset they own is data. The financial habits of its customers are a precious commodity that will become even more valuable in the mobile age.