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Three major U.S. wireless carriers formally announced a joint venture to allow their customers to pay for goods and services with their handsets.

The venture, dubbed Isis, will be run by Michael Abbott, who was formerly chief marketing officer of General Electric Co.'s (GE) GE Capital arm. Verizon Wireless, AT&T Inc. (T) and T-Mobile USA are participating in the venture.

The mobile payment network will use Discover Financial Services' (DFS) payment network. Barclays PLC's (BCS, BARC.LN) Barclaycard US will be the first issuer on the network.

The rare cooperation between traditionally bitter rival carriers underscores the need for alliances in building a mobile payment system. The breadth of the venture is meant to kickstart investment and interest in the area, which has suffered from fits and starts and disagreements over each player's role in the mobile financial food chain.

"This is an unprecedented partnership, one that's necessary," Abbott told Dow Jones Newswires on Tuesday.

Abbott said that the initiative was open, and stressed that Barclaycard would only be the first issuer in the venture.

"Barclaycard will have the first mover advantage as an issuer of multiple mobile payment products. It gives us great access to [the telcos'] 200 million customer base," said Amer Sajed, chief executive of Barclaycard US.

Unlikely to sign up, however are major credit card companies such as Visa Inc. (V) and MasterCard Inc. (MA), which are pushing their own mobile payment initiatives. In July, American Express Co. (AXP) hired Dan Schulman, who was the architect of Sprint Nextel Corp.'s (S) prepaid wireless strategy.

The divergent paths underscore the tension over who controls the mobile payment network, how the revenue is divided, and which party shoulders the financial and legal burdens.

While Abbott wouldn't comment on whether Visa or MasterCard would eventually play a role in the venture, he stressed that Isis is creating a new options that goes beyond payment.

"It's like comparing vinyl records to mp3s: both play music, but mp3s do more," he said. "We're not competing with plastic, we're creating a competitive alternative."

MasterCard, however, doesn't believe the venture is treading on new ground.

"There's no unique technology angle that's been brought here," said James Anderson, head of mobile product development at the credit card company.

Abbott declined to say when the service would be available for consumers. While Isis will launch with credit, debit and prepaid services, he anticipates more options, including the potential to offer coupons, loyalty programs and other features through the system. He added he expects the wireless carriers to promote Isis at their stores.

Verizon Wireless spokesman Jeffrey Nelson wouldn't comment on such a move, but said the carrier is fully supportive of the initiative.

"This clearly is a really important way for people to use mobile technology to conduct commerce," he said. "This really is our focus now."

Verizon Wireless is jointly owned by Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD, VOD.LN). T-Mobile is owned by Deutsche Telekom AG (DTE.XE, DTEGY).

The venture brings new competition into the payment area, as well as a new opportunity, said Diane Offereins, president of payment services at Discover.

Both the carriers and credit card companies are embracing a technology called near-field communications, or NFC, which allows a person to wave their card or phone in front of a scanner to pay for goods and services. NFC is already found in cards, and can be accepted at drugstore chains and gas stations.

Companies now rely on NFC stickers or memory cards with an NFC chip shoved into cell phones -- slowing adoption of the feature. But newer cell phones are expected to have the technology fully integrated. Research in Motion Ltd. (RIMM), for example, will use NFC chips in its BlackBerrys next year, according to people familiar with the company's phone rollout plans. Nokia Corp. (NOK) has been experimenting with NFC technology for years.

Abbott said he hopes Isis will act as a catalyst for further research and development.

"I fully expect there will be all kinds of investment and innovation around this network that I can't imagine," he said.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729; aparajia.saha-bubna@dowjones.com

--Phred Dvorak contributed to this report.

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