Carriers move to supplant credit cards with smart phones

Three of the nation’s largest wireless carriers are working on a joint venture that should give mobile banking and contactless forms of payment a major boost.
According to Bloomberg though, AT&T Mobility (T), Verizon Wireless (VZ) and T-Mobile USA Inc.(DT) are all working on a smart-phone payment system using near field communications (NFC) that would displace credit and debit cards.
While the new service would reportedly keep Visa Inc. (V), MasterCard Inc. (MA) and American Express Company (AXP) out of the mix, Discover Financial Services (DFS) would be the payments network that processes all of the transactions. Barclays Plc (BCS) is lined up to manage the accounts, according to Bloomberg, which cited three anonymous sources for the story.
There was no other details about the business model for the new system, how merchants would be charged for transactions and when the trial might begin at stores in Atlanta and three other U.S. cities. According to one analyst, merchant readers would cost about $200 each and the chipset required for mobile payment would increase handset manufacturing costs by at least $10.
While the carriers might be incredibly strong and adept at recurring billing, there’s no chance MasterCard and Visa are going to sit quietly, especially not when they controlled a combined 82% of U.S. consumer spending on general-purpose cards last year.
In June, Citigroup Inc. (C) introduced MasterCard PayPass stickers that, when affixed to a mobile device, could process payments at the 230,000 merchants that already support MasterCard’s solution. And Visa is working with DeviceFidelity Inc. on a technology that will transform phones into mobile payment devices that can store multiple accounts.