Under the plans, which experts claim will give m-payments a major push in the US, payments would be processed through Discover’s network – the fourth biggest US payment processor – while Barclays would be managing customer bank accounts. AT&T declined to comment on the partnership, but did not deny such plans are being made. “Mobile payments are a next logical step for consumers and we are looking at new ways”, said Mark Siegel, Executive Director of Media Relations at AT&T. Laura Gingiss, Senior PR Manager at Discover, also did not deny the partnership. “I cannot say anything else than that Discover is evaluating technology solutions”, she said.
The plans would establish mobile payments through near field communication (NFC). Under the plans, payments will be made by waving a smart phone in front of a terminal.
Mobile payments are not as widely used in the US as they are in Europe and Asia. Dave Birch, Consultant at Hyperion, expects the US market to change soon. “While AT&T and Verizon may have taken the market by surprise, plenty of others will be rolling out mobile payments. This will serve as a pathfinder, steering the US in a similar direction to Europe and Asia.”
“This is definitely a game-changer”, said Richard Crone, Consultant at Crone Consulting LLC. "The one who enrolls is the one who controls, and the wireless carriers are the only ones that have the mobile credentials. This has become a race for enrollment.”
The partnership poses a direct threat to Visa and Mastercard, America’s biggest payment processors. “Mobile carriers have an advantage over Visa and MasterCard in the race to control the market because the phone companies have access to their customers’ mobile numbers and bank account information”, said Crone. “All other businesses, be it a bank or retailer, must first get their customers to opt-in, and register their mobiles.”
Crone also expects m-payments terminals to be installed soon in the US. “All new payment types start with merchant acceptance and big retailers are the sleeping giant in the US mobile payments race”, he said. “Trust me, the top 50 retailers will have a phone application by the end of the year.”
This article was published in the August issue of E-Finance & Payments Law & Policy, copyrights apply.