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Currently, all security mechanisms cause inconvenience. Against that backdrop, I'd actually argue the opposite: Increased security raises friction and drives people to branches, checks and other traditional forms of banking. 

To paraphrase the famous quote by Samuel Johnson, "Security is the last resort of bankers who can't think of too many use cases other than account balance inquiry in their mobile banking offering". 

As Mint has proved, when you give people a great use case, they literally handover the keys to their Internet Banking accounts to rank startups. Per contra, as the Indian e-commerce experience has shown, when you make it painful for people to make ePayments thanks to 2FA and other security measures, they literally use cash even for online purchases (via 'cash on delivery' method of payment).

While PayPal is not likely to turn away any new customers, several reports suggest that its push into instore payments is not to acquire additional customers. Instead, it is to increase wallet share from its existing customers who otherwise use other methods of payments - cash or credit cards - to pay for their purchases at physical stores. So, incenting people to sign up for its service might not find a place at the top of PayPal's agenda at this point.

Regulators have already started jumping into the fray to regulate nonbank financial services providers. PayPal became regulated in India around two years ago. It has recently come under the provisions of Durbin Amendment in the USA. Mobile prepaid wallets like Airtel Money are already subject to painful KYC rules in India. According to this Fed article, GPR prepaid cards have recently come under the radar of the new consumer protection agency CFPB in the US.

While prepaid programs have an underlying FDIC-insured bank, cardholders' prepaid accounts are not mapped into bank accounts. As a result, cardholders' credit balances are not always protected by the underlying bank's FDIC insurance.  

As people begin to understand the hidden costs and terms involved in nonbank prepaid cards - aided by initiatives like "Ask CFPB: Prepaid Cards", no doubt - they might realize that the average bank account is cheaper and safer than the average prepaid card. When that happens, the market share of prepaid cards, which even now is only a "relatively small piece of the overall pie of preferred retail payment types", is likely to drop even further. Add to that the friction that will inevitably follow regulation, prepaid cards and mobile wallets are in for a rough ride.

Don't know how long the party will last but, for now, some banks are conscious about their social media image and address social media QRCs (Queries, Requests & Complaints) at lightning speed. One of my banks keeps spamming my Facebook News Feed with fairly irrelevant offers but, when it moved branch where I hold my account, it didn't bother to inform me about the relocation. I complained about this ironic behavior in a comment in response to one of its FB offers. Lo and behold, there was a flurry of activity from the bank's side. I can confirm that 48 hours, 3 telecons and 2 emails later, the bank has resolved my complaint to my satisfaction.

@BrettK: Good one, thanks! I bank with a couple of other banks. They use fully fledged implementations of 2FA - unlike the "my bank" of my blog post - and escape from the aforementioned ironies. However, they demonstrate a different, Newtonian type of irony: "Friction Skids Banking Rails".

@CJWimley: Thank you for elaborating. It'd be great if you could refer me to some whitepaper(s) on PBAD quant models.

Since the risk-based collections methodology pivots around PBAD, it's obvious that creditors have to get their PBADs right. Is there any methodology to quantify PBAD that is relatively free of subjective judgment?

We've also seen learning management systems proving very effective in getting debt collectors up to speed with collection-related tips-and-tricks, do's-and-dont's, and so on. This is especially true in large and geographically-dispered markets and during year-end collection drives. 

If Visa is taking such obviously-controversial steps, it'd appear that it has adequate coverage in its sponsorship contract to do so. In that case, a fair share of the blame for such inconveniences must go the organizers as well. Would be interesting to know the outcome of the last two furores related to ticket booking and card expiration date. 

Thanks for clarifying. I think there are two issues here: Mobile Wallet and Usability. Since you were able to manage your hotel booking via smartphone / tablet, am curious to know which mobile wallet is supported by your hotel booking website / app. Coming to usability, as I'd pointed out in my personal blog post "Will Mobile Blogs Impoverish Bloggers?", there are as many examples of good UX via mobile web as there are of bad UX via downloadable mobile apps. The lack of mobile booking solution for train ticket might harken back to deficiences even in the PC-Web solution and I doubt if mobile web or downloadable mobile app will have any bearing on UX.