Still, a confluence of recent developments suggests that the payment revolution engendered by mobile devices will forge ahead.
Innovation from start-ups
Small businesses are looking to shave costs wherever they can, so companies such as Square and PayPal are wooing shop owners to ditch their expensive point-of-sale equipment by offering per-transaction fees, simple loyalty programs and sales analysis.
A traditional retail payment system — including a cash register, credit card scanner, product scanner and software — can cost as much as $1,000 to $3,000. Credit card processors also often ask for long-term contracts, a monthly fee, a percentage of sales and an early-termination fee.
Square, a San Francisco company, has made huge gains in grabbing market share from traditional checkout operators. Shop owners who buy Square's small, white plastic scanner dongle and sign up can plug it into a smartphone or tablet and quickly process credit cards, while generating reports about sales volumes and patterns. Square charges 2.75% of each transaction.
Its growth has exceeded its own internal estimates. About 2 million merchants use Square, and about $6 billion in transactions have been processed since Square's debut in 2010.
Andy Nguyen, who with his wife, Uyen operates a Vietnamese-sandwich food truck called Lemongrass in the Washington, D.C.-area, considered several other wireless credit card payment processors but chose Square for its size and convenience.
With Square's dongle in his iPad, he can revise his menu and prices while keeping track of which items sell more than others, he says. "I don't have that much space here," he says, adding that about half his customers use credit cards. "I could go all-cash, but I didn't want to alienate anyone."
Wireless carriers — which stand to make money from all purchase-transaction data traffic carried on their networks — also are aggressively pushing the mobile-payment effort.
YiShaun Yang, owner of children's book publisher AdoraPet in Manhattan, was in search of ways to accept credit card payments at book shows when she walked into a Verizon store and saw Intuit GoPayment on display. A competitor to Square, GoPayment also is a phone dongle for scanning credit cards.
While she had considered other wireless payment systems, she was turned off by fees and long contracts, she says.
"It's hard when you have a small business, because you don't know how long you're going to be in the business," she says. "I wanted something that fits my small business. Not (a product) that imposed its bigger business model onto my small business."
Unlike Square, Intuit either charges a per-transaction fee of 2.7 percent, or, for merchants with high volume, a plan with a monthly fee of $12.75 and a 1.7 percent per-transaction fee.
VeriFone, a payment systems maker, and online payment stalwart PayPal also have recently introduced competing products that turn a phone or tablet into a card scanner. VeriFone's Sail and PayPal Here both charge 2.7 percent per transaction. VeriFone also offers the option of paying $9.95 per month for a lower 1.95 percent per-transaction charge.
LevelUp, another mobile payment start-up, is hoping to stand out from the pack with a greater focus on points redemption.
Customers who store their credit card information on its app receive a designated QR (Quick Response) code that's read at the merchant checkout. Customers who spend $50 get a $5 credit.
LevelUp makes money by charging merchants 40 cents per $1 of credit used by customers. For a $25 monthly fee, LevelUp waives merchants' customary per-transaction fees.