Wireless Carriers Weigh Venture For Mobile Payments - Sources
02 Agosto 2010 - 7:12PM
Dow Jones News
AT&T Inc. (T), Verizon Wireless and T-Mobile USA are
exploring a joint venture to test out a mobile-payment service in
select markets, according to people familiar with the
situation.
The national carriers are working with Discover Financial
Services (DFS) and Barclays PLC (BCS, BARC.LN) on a trial, the
people said, which would involve allowing customers to pay for
goods and services by holding their smartphones at cash registers
or taxis. Bloomberg earlier reported on the proposed venture.
The unlikely alliance of rival wireless carriers underscores the
difficulties of setting up a mobile payment system, which has been
stalled by the need for broad cooperation from carriers, handset
makers, banks and credit-card companies, each with competing
agendas.
The carriers, in particular, have pushed to maintain a larger
role to avoid being relegated to a simple pipe connecting the
consumer's cellphone.
A partnership with Discover, a second-tier player, suggests that
the carriers are lining up against the more widely accepted
companies, including Visa Inc. (V) and MasterCard Inc. (MA), which
have their own plans for mobile payments.
Discover shares rose 2.5% to $15.65, while Visa fell 2.4% to
$71.56 and MasterCard fell 3% to $203.70. AT&T shares rose 2.4%
to $26.55. Verizon Communications Inc. (VZ), which jointly owns
Verizon Wireless with Vodafone Group PLC (VOD), rose 1.5% to
$29.48.
"Discover is always evaluating technology solutions that make
things faster, safer, and more convenient for cardmembers,
merchants, acquirers and issuers," according to a company
spokeswoman.
The venture would focus on using a technology called Near-Field
Communication, also known as contactless payment. NFC chips are
already found in credit cards, which are activated when a customer
waves them in front of a sensor found near certain point-of-sale
terminals, such as drugstore cash registers. The technology isn't
new, but handset makers are reluctant to install it into phones
because there has been little progress in the area. Consulting firm
Philliou Selwanes Partners LLC said there are 500,000 contactless
readers in more than 140,000 locations in the U.S.
One telecom executive, however, warned the venture was still
early in the process, and UBS analyst Jason Kupferberg said he
would surprised if the it gained any popularity in the near
term.
Still, some believe the venture represents a significant step in
the right direction for mobile payments.
"We have seen numerous disparate efforts in contactless
payments," said Philip J. Philliou, a partner at Philliou Selwanes.
"This is most the meaningful initiative in the contactless payments
space."
Verizon Wireless already has dabbled in mobile payments. In
March, it signed a deal with South Korean mobile-payment provider
Danal Co. (064260.KQ) to allow its customers to make online
purchases on their handsets, which would be paid through their
cellphone bills.
Visa is already working with NFC technology, including
partnering with privately held DeviceFidelity Inc. to integrate NFC
chips into memory cards, which would be distributed to Visa
customers. MasterCard has partnered with a number of mobile
carriers and handset makers to test out NFC.
American Express Co. (AXP) recently hired Sprint Nextel Corp.'s
(S) prepaid chief, Dan Schulman, to expand its mobile payment
options.
-By Roger Cheng and Aparajita Saha-Bubna, Dow Jones Newswires;
212-416-2153; roger.cheng@dowjones.com
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