What does the future hold for mobile payment technology?

Very Bright.

The mobile phone market penetration numbers cannot be matched by any other communication or computing technology today. In countries like India, China, various countries in South Asia and South East Asia, the mobile phone for all practical purposes is the computing and communication platform. Mobile payments are a natural extension to these mobile devices (apart from communication and texting).

Some very good answers have been given here with respect to the US market, I will try to highlight a few points outside the US market, especially in the developing countries (read: markets) in Asia, Africa and the Middle East.

• Branchless Banking which has seen immense growth in South Asia and Africa, is primarily driven on mobile devices. BB today represents perhaps the largest mobile payments segment that there is, and it is growing by leaps and bounds. Reason: The mobile device now allows the unbanked (whom are in millions) to have banking and payments facilities. Think Easy Paisa in Pakistan, or mPesa in Kenya or Grameenphone in Bangladesh. All these players provide a multitude of services related to mobile payments.
• In countries like India, Brazil and Pakistan, the mobile payments market is primarily driven by Banks. In countries like Philippines it is driven by the Telcos.
• EBPP - Electronic Bill Presentment and Payment is a huge success in developing countries. More and more subscribers are using their mobile phones to make utility payments than ever before.
• Inward Remittances: Home remittances or worker remittances into any developing country are now being disbursed via the mobile networks than in its previous years. The growth is just phenomenal. Aided by the explosive growth of branchless banking, sending money to your loved ones in far flung places where access to a physical ATM, or Bank Branch is next to impossible, the mobile networks coupled with real-time settlement of inward remittances is empowering these economies that rely heavily on the money sent by the expats.
• Person-to-Person payments are now becoming more common. They are essentially a sub-category of branchless banking, but more and more players actively participating in the evolving the payments eco-system so that P2P payments across same and/or different payment networks is now possible.
• VCT (Virtual Card Technology), the ability to have a virtual VISA or Mastercard attached to your phone number / SIM is now slowly evolving. This is another area where VISA and Mastercard are expected to rake in big, because of their payment networks and being able to provide prepaid / reloadable VISA or Mastercard virtual debit cards to the masses.
• On the retail sector, branchless banking is already fully entrenched. Many are now opting to pay via their mobile phones as opposed to carrying cash.
• A huge advantage in the developing countries for the wide acceptance of mobile payments is that most of the payment transaction fees are based on a fixed per transaction charge versus a percentage value of the amount being transacted.
• All of the above is being done using standard (non-smart) phones. Imagine the possibilities of the potential mobile payments eco-system when these countries and its users adopt smart phones.

It is fair to say, that in the coming year and beyond, Governments will be promoting mobile payments with greater emphasis and vigour. Banks have already seen fantastic ROIs (measured in months) for the branchless and mobile payment rollouts that they have done.