When the iPhone first hit the market, the pundits started touting the huge benefits that would come from carrying around a computer in our hands. Some of those benefits have been transformational. There used to be a rack with maps inside every gas station and convenience store to help travelers figure out directions. The map industry has been completely displaced by online GPS and driving instructions that have brought huge efficiency and a lot fewer lost travelers wandering rural roads.

We were also told that the Rolodex was dead and that you would be carrying everybody’s contact information with you – something that quickly became true. When was the last time that you called information to get somebody’s telephone number?

At the top of the claimed benefits was the promise that we’d quickly be paying for everything seamlessly with our smartphone. We’d be able to buy from a vending machine or shop at a store by just waving our phone.

There has been some movement in recent years to make this easier. You can load credit or debit cards into your phone and use Apple Pay, Google Pay, or Samsung Pay at places that accept the payments. There is a more recent movement to allow people to seamlessly pay each other through direct bank debits without having to use an intermediary service.

But we are nowhere near universal acceptance of payments through a phone. There are a number of reasons why this is still the case 16 years after the promise that this was right around the corner.

• A bank survey in 2022 showed that 38% of Americans would refuse to use such a payment system. But that is not an excuse for making it easier for everybody else.
• For many years, financial institutions didn’t have any interest in accepting micropayments. Banks were not interested in enabling a system that would generate millions of $1 transactions at vending machines or other types of small transactions. The fees the banks wanted for the transaction were too high to make this reasonable.
• There were always a lot of concerns about security. Somebody could steal a phone with an automatic payment system and spend it without scrutiny. That’s being solved in many cases by phones tied into biometrics.
• All of the proposed payment solutions require sellers and retailers to foot the bill for the electronic readers that can accept payments. This is particularly challenging when there isn’t a universal reader that would accept payments for multiple payment systems. The different payment systems have been pushing unique hardware solutions. This has led to many merchants unwilling to embrace electronic payments.
• It’s even more of a challenge to equip millions of vending machines, gas pumps, and other payment portals with readers, particularly those in an outdoor environment.
• There are still plenty of merchants in rural areas that have problems accepting credit cards the traditional way. A credit card transaction doesn’t require the transfer of a lot of data, but it requires a stable connection to be held during the length of a transaction. A lot of rural broadband fluctuates and kills a lot of credit card transactions.

Perhaps the most important reason it’s not widespread here is that the U.S. took the high-technology approach, like we do with many things. Requiring a new set of payment readers is good business for the merchant service companies that provide the readers and the software for merchants.

To demonstrate how we might have taken the wrong path, we only need to look at India. A common payment method for outdoor street vendors is to have a QR code posted. A buyer scans the QR code, which sends them to a portal where they approve the amount of payment. When the payment is complete, a message is sent and is usually played out loud on the merchant’s cell phone. When somebody buys food from a food cart, the payment can be completed by the time the seller is ready to hand over the food. Maybe we are just making this too complicated.