AT&T, Verizon Wireless, T-Mobile USA partner on smart phone payment system
Bloomberg has reported that AT&T and Verizon Wireless, with participation of T-Mobile USA, are partnering on a payment system, which will enable consumers to make retail purchases with a swipe of their smart phones. The move cuts traditional credit providers such as Visa and MasterCard out of the mobile transactions, expected to grow to $630 billion by 2014. The three wireless operators plan to run a trial of the solution in Atlanta and three other U.S. cities, continued the Bloomberg report, with Discover Financial Services’ payment network processing in-store transactions and Barclays managing the accounts. More than half of U.S. consumers, and almost 80 percent of those between the ages of 18 and 34, will use mobile financial services within five years, according to consulting firm Mercatus. But both handset manufacturers and merchants would have to upgrade to accept mobile payments; the Federal Reserve Bank of Boston estimates that merchants would have to spend approximately $200 per reader, and embedded microchips would increase handset manufacturing costs by $10 to $15 per handset.