young woman with cell phone - pay mobile phoneInterest is growing around the idea of using your mobile phone to pay for goods and services. Visa recently announced its intention to let people transfer cash to one another using their cell phones, and software developers are working on programs that would turn your phone into a kind of virtual wallet you could use to pay for just about anything.

For people who think carrying around a wallet full of credit cards is archaic, or for those who don't want to keep large sums of cash in their pocket, the idea is tantalizing: Just wave your phone in the direction of a payment transmission machine and walk out of the store with your purchases.As with most things that promise to make our lives more convenient, though, there's likely to be a cost attached to this. Retailers are still in the midst of a big fight over the interchange fees they have to pay for the privilege of accepting plastic, and they're concerned that these new methods, if not properly policed, could lead to more of the same. That's why, even though this technology exists and is already in use in other countries, American shoppers are stuck behind the times.

Mobile payment processes would introduce a host of new players into the game. If you pay with plastic, participants (aside from you and the merchant) include their bank, the bank that issued your card and the network (like Visa, for instance). If you add a cell phone into the mix, that also means adding in the phone company and the company that makes the payment software.

Mallory Duncan, senior vice president and general counsel for the National Retail Federation, a group representing merchants that's been outspoken in its calls for lower interchange fees, says the organization doesn't want mobile payments to be a cash cow for banks at retailers' expense. The NRF's biggest argument, one which is generally supported by consumer advocates, is that high fees get passed along to all customers in the form of higher prices.

"What we're interested in is if the existence of these devices will empower payment systems that will be fairer to all parties involved," Duncan says. He adds that he's hopeful that injecting some competition into the mix in the form of smaller tech companies that could bypass the traditional payment methods could force the industry's existing heavyweights into lowering what they charge. And he says that lower fees could actually be in banks' best interests, if it leads to greater adoption of mobile payment technologies.

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