US telecom giants AT&T and Verizon are looking to displace that ‘must-have’ accessory in every American’s wallet, the credit card, by trialling a mobile payments system that could replace plastic.
This could considerably affect the operations and…
US telecom giants AT&T and Verizon are looking to displace that ‘must-have’ accessory in every American’s wallet, the credit card, by trialling a mobile payments system that could replace plastic.
This could considerably affect the operations and revenues of Mastercard and Visa.
The partnership, which also includes Deutsche Telekom’s T-Mobile USA, will be working with Barclays and Discover Financial Services, testing a system at retail outlets in Atlanta and three other US cities. The smartphone-enabled payment service would let a consumer pay with the contactless wave of a smartphone.
The trial would be the carriers’ biggest effort to spur mobile payments in the US and supplant more than 1bn plastic cards in circulation in the US today.
“This is definitely a game-changer,” industry consultant Richard Crone of California-based Crone Consulting told The Washington Post. The firm advises card networks, issuers and phone companies. The mobile carriers “are the biggest recurring billers in every market. They are experts at processing payments,” Crone said.
New York-based MasterCard handled US$2.5tr, or 82%, of US consumer spending on general- purpose cards last year, according to the Nilson Report, an industry newsletter. That dominance has helped fuel profit growth for both companies. Visa’s annual operating income has grown sixfold since 2005 to US$3.5bn last year. MasterCard’s has surged more than fivefold to US$2.3bn.
The service, similar to those already available in Japan, Turkey and the UK, would use contactless technology to complete purchases in stores. They’d be processed through Discover’s payments network, currently the fourth-biggest behind Visa, MasterCard and American Express, Barclays would be the bank helping to manage the accounts, the Washington Post claimed.
AT&T declined to comment on this story. Verizon and Barclays had not responded for comment at the time of press.
