Hungry? No cash in your pocket? Not a problem if you were anemployee at SEFCU, the $2.4 billion upstate New York credit union, duringan ambitious pilot it ran last summer and fall to test an FISmobile wallet product at Zia Maria’s Cafe at the SEFCU corporateheadquarters in Albany.

The pilot met with such success that SEFCU decided to continueit beyond an initial 90 day test run.

What can you buy? Food and drinks at this quick-serve eaterythat functions as the employee cafeteria, serving a pool of some300 employees. Average checks range from $4 to $10.

To participate employees need an iPhone or an Android phone and,in the pilot, 59 joined in, according to data collected andanalyzed by Javelin Strategy + Research.

Mary Monahan, a Javelin analyst, stressed that the potentialimportance of the SEFCU pilot transcends the limited user base.That is because this FIS wallet, developed in association withBoston apps developer Paydiant, is cloud-based,smartphones don’t need special hardware to access the walletfeatures, but they do need a consistent Internet connection, saidMonahan. Connectivity, or lack thereof, will make cloud-basedwallets no-goes in many settings, she acknowledged.

The plus is that phones do not need special near fieldcommunication chips; neither does the merchant need a special POSterminal to process charges, said Monahan. That gets the pilot upand running quickly and inexpensively.

Very few phones on the market currently come with NFC chips, andnot many merchants have NFC capable terminals.

The SEFCU pilot is one of many that are probing differentaspects of mobile wallets, each of which builds off the assumption that the timeis here for consumers to jettison leather wallets and plastic cardsin favor of paying with a smartphone.

The space is hectic with activity. Calvin Grimes, mobile product manager at Fiserv, said, “Thereis a lot going on with mobile wallets. We are seeing many pilots inthe U.S.” He added that the pilots seem small, but a lot is atstake. “The ultimate makeup of the U.S. infrastructure remains tobe seen. The end result needs to satisfy consumers, merchants, andfinancial institutions.”

Grimes acknowledged that Fiserv, too, has conducted pilotsoverseas. “We are looking for our next steps in the U.S.” Hedeclined to provide further details, but added that Fiserv toowould be announcing details of U.S. mobile wallet pilots soon.

PSCU, the St. Petersburg, Fla., based CUSO, also has announcedplans for a mobile wallet, rooted in MasterCard’s PayPass technology, that it hopes to roll out to creditunions.

Back in upstate New York, the Javelin report described how theprocess works at SEFCU.

“When consumers indicate they would like to make a mobile wallettransaction, the cashier inputs the transaction and receives a QRcode from the FIS service. The consumer selects the ‘pay’ functionin the mobile wallet app on their phone, and scans the QR code. Thecode is sent over the cloud to the FIS service.”

Big benefits, said Monahan, included “thelowered interchange fee. They could process it as a PIN debit.Reduced fraud will also be a benefit.”

She acknowledged that hardware-based wallets, likely involvingNFC. will probably prevail, if only because they sidestep theconnectivity issues. In the meantime, said Monahan, “You will see alot of cloud based wallets, until we have the terminals and phoneswith NFC chips. Cloud-based wallets will get people used to usingtheir phones for payments. Chips make more sense; they workregardless of whether you are connected or not. But cloud-basedwallets are a good interim solution.”

As for why SEFCU decided to participate in the pilot, theJavelin report quoted Cheryl Collier, SEFCU vice president,operations. “Our industry has seen all of the opportunitycosts of surrendering our payment revenue streams to third-partyintermediaries such as PayPal and Starbucks, so waiting on thesidelines was just not an option. We saw it as an opportunity tooffer value-added services to our credit union members.

SEFCU President/CEO Michael Castellana set the vision early onthat our organization couldn’t sit on the sidelines of thispayments revolution. But that we had to become actively involved inthe various emerging payment technologies.... Once the vision wasset, our focal point was centered on not having our members openanother FI’s or non-FI’s wallet but to open a SEFCUwallet.”

SEFCU had not made an executive available to Credit Union Timesto elaborate on these points by press time.

Is this the year that mobile wallets finally take off? SivaNarendra, CEO of Portland, Ore.-based NFC developer Tyfone,which has announcedwallet deals with several credit unions, insisted there would belift off for wallets in the next three or four quarters. Merchantacceptance, especially at big national retailers, is growingand, he stressed, “financial institutions need to develop their ownwallet strategy now.”

The threat of disintermediation, FIs losing traction in thepayments equation, displaced by new technologies and theirproviders, is real, stressed Narendra.

“Today, mobile wallet use is on a very small scale,”acknowledged Narendra. “But that is changing fast.”