Mobile carriers AT&T and Verizon, along with T-Mobile, are reportedly working on a "contactless" solution that will let consumers pay for purchases via a touch of their smartphones.
AT&T, Verizon Wireless and T-Mobile are planning to challenge Visa and
MasterCard as the newest facilitators of quick-shopping dollars.
The carriers-AT&T and Verizon most dominantly, with Deutsche Telekom's
T-Mobile in a supporting role-are planning to pilot a program that will allow
consumers to pay for items using "contactless"
on their mobile phones, Bloomberg
reported Aug. 1, citing "three people with direct knowledge of the plan."
The pilot will reportedly kick off in Atlanta,
before launching in three other U.S.
cities. The carriers, which are the "biggest recurring billers in every
market," according to consultant Richard Crone in Bloomberg, are
going after the $2.45 trillion market that Visa and MasterCard reportedly
enjoyed in 2009.
Similar programs are currently popular in Japan,
Turkey and the United
Kingdom. In the United
States, the program will be handled, with a
bit of help from Barclays, by Discover's payments network-the fourth largest
behind Visa, MasterCard and American Express, according to Bloomberg.
The time may be right for contactless payments, as U.S.
consumers increasingly turn to their mobile phones for purposes well beyond
placing calls. In addition to Web surfing, e-mailing and turn-by-turn
directions, mobile banking rates continue to rise-worldwide, Juniper Research
expects 400 million people to subscribe to the service by 2013-as do services
such as mobile ticketing. In a July report, Juniper forecast mobile ticketing
transactions-whether for travel or sporting events-to exceed $100 billion, more
than doubling the 2010 market.
"I think it's a very natural next step for mobile service providers to
get into this," Charles King, principal analyst with
Pund-IT Research, told eWEEK. "They have the funding and the type of
financial resources available that they can create a transaction system that
would probably rival Visa's."
Plus, said King, consumers in their teens, 20s and even 30s are so
used to using their phones for a variety of services that "using their
phone as a payment mechanism would probably be very natural for them."
Bloomberg reports that Visa is currently in talks with a number of mobile
operators to partner on a contactless phone solution. While King said he
isn't surprised that Visa or MasterCard wouldn't simply step aside and let
other institutions come between them and their customers, it's not so clear
that an AT&T or Verizon would necessarily find it worthwhile to "give
up a piece of their pie," in exchange for the card companies' expertise.
As for the timing of the pilot, "you want to get the system up and going
and get the bugs worked out before the biggest retail season of the year," he
said. Launching within the next 60 to 120 days, he said, would give the
carriers the time they need to work things out, while also creating "significant
revenues for this year."