The ubiquity of the credit card and the impact of the recession mean the move to use a mobile phone to make payments and conduct banking is likely to be a slow and tortuous affair in Europe.
The use of the cellphone to transfer money in emerging markets in Africa, India and Latin America has taken off strongly in recent years as operators provide services to millions who otherwise would have little access to a bank.
But in Europe mobile payments have barely moved beyond the trial stage and many industry executives believe consumers will only make mobile payments in certain niche situations in the short term, potentially denying operators a way to increase customer loyalty and gain additional revenues.
"(Mobile money) is going to be a longer slog that takes more brain power and maybe more commitment than a lot of the operators are used to putting into value-added services," Mark Pickens, an analyst at the microfinance centre CGAP based at the World Bank, told Reuters.
"You can't do it on the cheap, it's not a ringtone."
Juniper Research estimates that more than 500 million people around the world will use mobile money transfer services by 2014, principally in developing countries, but forecasters are reluctant to predict figures for Europe due to the slow uptake.
The telecom trade body GSMA predicts that operators could make $5 billion from financial services by "banking" 364 million unbanked people by 2012.
Douwe Lycklama, the founding partner of the electronic payment consultancy firm Innopay, told Reuters there was no fundamental demand in Europe because the majority of consumers already have credit cards.
"It will not become cheaper, it will not become faster, so there is not a dramatic increase in benefits to the merchandiser or the buyer," he said in an interview.
Analysts expect mobile money to develop in two ways.
Software applications, or apps, and the mobile Internet can provide consumers with more control and contact with their bank, allowing users to check their latest transactions and account balance and be sent alerts when they are nearing a limit.
"It all comes back to the smartphone," said Andrew Bud, co-founder and Executive Chairman of the world's largest mobile transaction network, mBlox.
"You can see more on the screen and do more with it. It makes it possible to do slightly more complicated buying decisions and that means a slightly wider range of products are going to be purchased, including more expensive things."
TOUCH AND GO
For mobile payments, users can already make remote purchases for things such as parking, sports or music tickets via existing technologies including text messages, automated voice services or via mobile applications on smartphones.
Analysts also expect vouchers and coupons which provide price reductions at places such as restaurants and coffee houses to grow in popularity, and especially when that is matched with location services which can target your position.
But the real game-changing device, and the subject of focus in Europe, is based around near-field communications which make contactless payments available with the swipe of a phone.
Many analysts and executives expect the offering, which in effect merges a credit card with a phone, to become mainstream at some point in Europe, but the required investment from the banks and retailers has been slow in coming.
"The downturn hasn't helped," Peter Simpson, chief marketing officer of money alerting service Monitise, told Reuters. "I think there has been a reluctance by the financial institutions to invest in new technologies at this time."
Analysts and executives believe near-field communication is more likely to take off in developed markets because the infrastructure is expensive, although they accept it will require the backing of retailers who still need to be persuaded.
Guido Mangiagalli, who develops new products and channels for Visa Europe, told Reuters the retailers would likely consider upgrading to a new system if they could see the consumer demand. And that requires a better proposition.
Mangiagalli said the use of the phone to purchase goods in a shop by swiping a touchscreen would be just one aspect.
"We can then start to think of new channels and new services," he said. "I can do e-commerce securely on the phone. I can browse Amazon, click pay and that's it."
Most analysts accept that it is only a matter of time before mobile payments and banking arrives in Europe, especially with the high take up of smartphones and their bigger screens.
There is also clearly consumer demand for certain services -- a recent application from Natwest allowing users to check their balance and a cash card from Telefonica's O2 have both proved hugely popular. But a full rollout will require banks, operators and retailers working together.
"We expect the next major milestone for mobile banking in Europe to be the launch of mobile contactless payments although there is still some way to go," said Fraser Campbell, head of O2 Money. "While the technology is ready, the mobile, financial and retail industries need to come together." (Reporting by Kate Holton, Editing by Sitaraman Shankar)