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NEW YORK (
TheStreet) -- The
digital wallet is coming, that's a definite. As the space is getting more crowded, though, it runs the risk of being driven by nothing but greed. That could hurt the space more than it helps.
Wal-Mart(WMT - Get Report),
Best Buy(BBY - Get Report),
Target(TGT - Get Report) and a host of others are
creating their own mobile payments network, known as a
Merchant Customer Exchange to challenge the existing mobile payment systems.
The space is already crowded enough, with
eBay's(EBAY - Get Report) PayPal,
Square and others jockeying for position, and dollars. Even the
telecom companies such as
Vodafone(VOD) are in the space.
It's justifiable that these companies want a piece of the pie, and to not have to pay third-party providers. The space is expected to grow four-fold, from $172 billion in mobile-payment transactions this year to $600 billion by 2016, according to research firm
The "next big thing" is mobile payments. Everyone gets that. Just look at the deal Square signed with
Starbucks(SBUX - Get Report) last week. It brought the space to Main Street, in hopes that more people will become comfortable using the technology.
Why Square Coming to Starbucks Is a Big Deal
By offering this alternative, it keeps more money in-house, and the retailers can leverage what they already know about consumers shopping habits to provide a more pleasing shopping experience.
What these companies don't realize is that the more entrants in a space, particularly one as sensitive as payments, the more it's going to confuse everyone. It could cause mobile payments to go from being "the next big thing" to being "the next big thing that wasn't."
People are just becoming comfortable paying with services such as PayPal. By fostering more alternatives and hoping for change, it may backfire, and cause people to pay with change, instead of changing their pay habits.
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Written by Chris Ciaccia in New York