I was in Washington this week for client meetings and to attend an FTC conference on mobile payments. At the conference, in addition to many regulatory lawyers and consumer protection advocates, there were the usual mobile payments suspects: Visa, MasterCard, Google, Isis, Intuit, etc., as well as a host of startups: LevelUp, Dwolla, Boku, and others. American Express, PayPal, and Square were missing.

I gave an overview talk on mobile payments, and had to sum up, in a few slides, the state of NFC payments – for a crowd that included many unfamiliar with the topic. I had listed the challenges for NFC payments as “new phones, new terminals, new business relationships”. But it occurred to me later that I had left off what may be the biggest challenge: debit issuers.

Simply put, the United States is a debit card market. I find that more-or-less affluent payments professionals still have difficulty getting their minds around this – after all, they themselves habitually use credit cards in preference to debit cards. But you can’t argue with the data. And debit issuers, still reeling from the combined impacts of the new overdraft rules and Durbin, simply don’t have any money. Certainly not enough to afford the TSM provisioning charges and wallet “rents” being proposed.

So here is my question to Isis and Google, and to Visa, MasterCard and American Express as supporting players: how are you going to make NFC payments affordable for debit issuers? If this problem isn’t solved, the debit issuers will go the way of the cloud wallets: see Scott Loftesness’s post on the Paydient/FIS solution as an example.