James Van Dyke at Javelin weighs in on the fervent anticipation of contactless payments. He observes that the current "closed loop" versions of contactless payment do not offer sufficient value to merchants or consumers to drive adoption. Van Dyke recounts his own personal, frustrated, attempts to use contactless payment methods (only 1 in 10 succeeded). He suggests that the industry focus less on incremental, minimal value, steps and focus on the true value-add mobile payment that will drive incremental transactions.

Bottom line, Javelin believes that these two separate business
initiatives (contactless and mobile) must merge into one in order to
bring adoption to both. Sure we’ve all been expecting contactless to
roll out sooner and mobile payments later, but these two apps are each
incomplete halves of a whole.

I recommend that you read the whole post here.

Latest research from Javelin on contactless payments:

Mobile Payments Forecast: Contactless Evolution Flounders Without Heightened Attention to Merchants And Wireless Carriers
June 2007
download research brochure

Recent ComputerWorld article on contactless payments:

No Contact: Could smart phones spur contactless payment card adoption?
Computerworld
June 11, 2007
link to article