YNOT – The two largest cellular phone companies in the U.S. — AT&T and Verizon Communications — have a plan to make credit cards obsolete, according to a story reported Sunday by financial news agency Bloomberg. T-Mobile, the fourth-largest mobile provider in the U.S., also holds a small stake in the alliance, Bloomberg reported.Working with Discover Financial Services and global bank Barclays, the communications companies may test the new service in Atlanta and three other cities by the end of the year. Reportedly, the process will allow consumers to send payment data wirelessly via their smartphones instead of swiping a plastic card at the point of purchase.
None of the reputed partners are talking about the alleged deal.
According to Bloomberg’s unnamed sources, however, Discover will process the payments through Barclays, which will serve as the acquiring bank. This surprised some observers, as Visa and MasterCard are the dominant credit card players worldwide, with Discover running a distant fourth in the U.S. behind American Express. According to financial industry newsletter Nilson Report, MasterCard handled 82 percent of U.S. consumer credit card spending — or $2.45 trillion — in 2009.
Visa and MasterCard have been seeking entre into the wireless payment market for several years. MasterCard’s PayPass contactless payment system, available primarily at gas stations, now offers a sticker consumers can paste on their cell phones in order to make the phones PayPass “swipable.” Visa developed an iPhone app that allows consumers to store information for multiple accounts within their phones.
Visa launched a limited cell phone payment trial in conjunction with Nokia in 2003, but the results reportedly were disappointing.
Cell phone payments are commonplace in some parts of Europe, the Middle East, Australia and Japan. In the U.S., however, lagging wireless technology and consumer concerns about security have hampered adoption.
