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Small Businesses Assess Mobile Payments

As mobile payments technology becomes more refined, smartphones are likely to become more "location aware," says Mazooma's president, Wilson Lee, which means as consumers pass by establishments, merchants will eventually have capabilities to identify and offer instant coupons and deals.

"The old traditional kind of e-commerce sites that people are used to are not optimized for the Gen-Y crowd," who are a lot more tech-savvy and social media-inclined, Lee says.

Large retailers are getting on board with the help of companies such as Digby. The company names Home Depot (HD), Costco (COST), Lilly Pulitzer and others as clients.

Stephen Burke, vice president of Resource Interactive's mobile practice, says mobile strategies could be most effective for establishments that have frequent repeat business or as a way to stand out against the competition.

"Bigger players are going to be able to help create the consumer behavior, which is important, and reinforce it," he says. "Once we start seeing it in restaurant chains, like McDonalds (MCD), that will be a real turning point for small businesses as well."

He cautions that small businesses may want to hold off for at least a year as the industry shakes out before deciding on a permanent mobile strategy.

"For something that is going to be a mom and pop restaurant or dry cleaner, people like that who have a reliable payments system, there is still time to evaluate," Burke says. "A consumer is still going to buy with a card if the mobile payment is not there."

-- Written by Laurie Kulikowski in New York.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

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