Mobile payment — payment for products and services via a mobile device, usually a cell phone — is coming. In Japan, shoppers already pay for purchases via their cell phones through NTT DoCoMo, the dominant cellular carrier there. People will use their mobile phone to pay for anything, even trivial things like a can of soda from vending machine. All they do is point or wave their phone at the appropriate place.

Before widespread mobile phone payments become possible, however, considerable work needs to be done, including infrastructure work. But the industry is working on it. CTIA, the Wireless Association (formerly known as the Cellular Telephone Industries Association), just published its best practices and guidelines for mobile financial services (MFS).

So, in addition to cash, check, letter of credit, credit card, debit card, money transfer, PayPal, and whatever other forms of payment your organization currently accepts, prepare for yet another, payment via mobile devices. And if the industry acts true to form, expect not one but several variations, each with its advocates.

The purpose of the Best Practices Guide, according to CTIA, is to “to establish an environment where MFS transactions are authorized, secure, and compliant with applicable laws and industry guidelines, and to protect user privacy and financial data.” The guide will address data security, consent, disclosure, and account information access. CTIA recognizes that the need to ensure the safety, security, and privacy of user information is paramount, and the guide establishes the application providers as the party responsible for protecting consumer information in all stages of a transaction. Do you trust your applications that much?

Security will be a nightmare. Today, few cell phones have password-controlled access and even fewer provide for data encryption. This will have to change, but with several billion mobile devices already out there, it will take some time to convert the user base to secure phones. As it is, the IT folks are in a panic over cell phone access to corporate data. Imagine some dad’s cell phone slipping out of his pocket during a Little League game.

Ready or not, mobile payments are coming. Juniper Research estimates that remote and in-store mobile-phone payments will reach $375 billion by 2013, up from $57 billion in 2008. Although the United States is late to the mobile-payments party, use of mobile banking here has exploded in the past two years, and this will drive mobile payments of all sorts.

Consider this: PayPal, the leading global online payments service, recently announced it is joining GlobalPlatform, the smart card infrastructure standards organization, and plans to contribute to the ongoing development of standards to ensure interoperability across the payments industry. In 2007, GlobalPlatform launched its own Mobile Task Force for the purpose of joining in the development of mobile telecommunications standards worldwide.

Where is all this headed? Your mobile phone will replace your wallet. ###