Clearly, the debate around mobile banking has moved on from a question of whether it has legs to one of where it is headed. And with the entry of the redoubtable Google and Apple into mobile payments, I guess even that discussion is effectively sealed.

Mobile payments is the logical next step of mobile banking, and a necessary response to customers’ expectation of greater convenience, accessibility, and capability from their banking service. Research says that there were over 108 million mobile payment users around this time last year. Even in 2009, shoppers were using their mobiles either as a purchasing device, or at least an aid to decision making.

But other than long-term potential, little is clear about mobile payments. Mobile payments are very much a work in progress, with no clear winners among technologies, standards, business models, or even intermediaries. By now it is obvious that SMS – with its high cost and limited abilities – is not the future of mobile payments. But what is? USSD? Contactless payments using microSD cards? An embedded NFC chip? Or, far fetched as it may sound, a technology based on voice authorization of payments? Since each of these has its advantages and limitations, it’s a pretty even fight, with all players – from banks to mobile operators to phone manufacturers – backing one or the other.

Then there is regulation, which in surveys ranks as one of the biggest challenges to mobile payments strategy. In the U.S. alone, at least 5 regulators – 3 for financial, 1 for telecom and 1 for consumer protection issues– could potentially be involved in overseeing mobile payments. Here, as in other parts of the world, it is still not clear how financial and telecom regulators will share the responsibility for regulating mobile payments, and who will ultimately be in charge. The other challenge before them is to establish full traceability of the origin and destination of payments in compliance with KYC, AML and related laws.

Another question that needs to be sorted out is which standards to use. Currently, the lack of a global standard for mobile payments is forcing many banks to sit on the sidelines, even as a few, more enterprising institutions have proactively teamed up with mobile operators to arrive at a mutually acceptable approach.

No doubt, these open questions partly explain the lack of urgency on the part of banks to push mobile payments. However, with outsiders making a play for this business, banks cannot afford to hold back. In my view, rather than fighting one technology with another, or worse, waiting and watching, all participants in the mobile value chain – from network operators and banks to handset manufacturers and payment processors – must try to find common ground in their respective agendas. One way to do so is to keep customer interest top of mind. It is such things that payment incumbents must focus on and forge ahead, if they don’t want to lose out to the likes of Google and Apple, who will neither wait nor watch, but do what they do best – go out and delight customers.