Wireless carriers using contactless payment technology for Smartphone charge card processing could give bank card companies a worthy competitor. A proprietary mobile payments technique being developed by AT and T, Verizon and T-Mobile that lets individuals spend by waving their Smartphone past a scanner could compete directly with MasterCard and Visa. The competition within the payments market is welcomed by retailers, who have fought with bank card corporations over excessive swipe fees.
United States Smartphone credit card processing catches up
A test system in Atlanta and 3 other cities marks the beginning of a payment service network that advances beyond credit cards. Bloomberg reports the service uses contactless technology comparable to mobile payment systems in Japan, Turkey and the U.K.. One business analyst told Bloomberg the AT and T/Verizon/T-Mobile Smartphone charge card venture was a “game changer” since the wireless carriers are the biggest recurring billers in each market and are experts at processing payments. To deal with payment processing for the new network, the carriers have enlisted Discover, the fourth largest bank card company after Visa, MasterCard and American Express.
Contactless payments must clear hurdles
Contactless payment features are available in 60 percent of Smartphone’s in Japan. In the United States, hackers will have additional incentive to focus on Smartphone bank cards if they become popular. Consumers will even be vulnerable to unauthorized purchases with lost or stolen Smartphone’s, just as they are with credit cards.
Billions at stake in mobile payments competition
The phone carriers have business within the race for a piece of the mobile payment market. ChannelWeb reports that credit card corporations and technology firms have stepped up the pace of their mobile payment initiatives as the Smartphone marketplace has boomed. Their background in payment processing makes wireless carriers believe they have an edge. But Joe Bardwell, of Connect802, a California wireless solution provider, told ChannelWeb he wonders how processing payments for their customers will translate to servicing merchant accounts directly as a payment service network. Plus, consumers that already don’t care for the wireless carriers’ billing practices may not trust them to deal with charge card payments.
Competition in payments market welcomed by retailers
Retailers could gravitate to another payment service network after years of fighting over transaction fees set by Visa and MasterCard. To emphasize that fact, Bloomberg cites an effort by retailers last month to gain caps on swipe fees from Congress, also as a 2005 federal anti-trust lawsuit that remains pending . A secure and reliable competing network that gives consumers mobility payment choices and reduces retailers’ costs would be welcome, a spokesman for the Retail Industry Leaders Association said in the Bloomberg article. Within the Bloomberg article, an official from the Retail Industry Leaders Association said merchants will welcome one more payment network that saves them money and gives consumers a secure, reliable, convenient purchase option.
Additional reading
Bloomberg
bloomberg.com/news/2010-08-02/at-t-verizon-said-to-target-visa-mastercard-with-smartphones.html
Tech News World
technewsworld.com/story/70546.html”
Channel Web
crn.com/mobile/226500140″>
