Mobile payments have been a sticky area of development with lots of hurdles and moving parts. But once developed and adopted in earnest, the field has the potential to unlock all kinds of mobile commerce capabilities both online (e-commerce) and local offline (brick and mortar).

MobilePay enters this space by launching at the TechCrunch Disrupt show today (was that name really not taken?). Its appeal comes from its lack of additional hardware (i.e., Square) or margin compressed carrier billing. The mobile app lets users pay local merchants in a cloud-based manner.

Opening up the app shows you the closest merchants via geolocation (like Foursquare et al). Selecting a merchant then allows you to enter and verify a purchase amount. All your credit card information is previously stored on the app for more seamless transactions.

But since the data are stored in the cloud, they are accessed by password and nothing is actually stored on the phone. That way lost or stolen phones can’t access the info, and it can be erased remotely from your home computer. This makes it more secure than physical cards, the company claims.

This is all very appealing and will soon extend to loyalty cards, which have the traditional barrier of card-carrying fatigue (see PlacePop). But it doesn’t come without hurdles. There are the typical chicken-and-egg challenges of critical mass of users driving merchant adoption (and vice versa).

The latter could be the biggest gating factor. Though there aren’t additional hardware requirements for merchants to sign up … they still have to sign up. And without a great deal of merchants that accept MobilePay, it will be (at least in early stages) a sparse user experience.

Still, it’s great to see innovation in the area of mobile payments. Sooner or later we will see greater ease and adoption in this field. Many parallel areas of mobile local commerce will take off as a result.

MobilePay currently comes as an iPhone app with more platforms on the way. Watch the video demo here.