Technology

The business and culture of our digital lives,
from the L.A. Times

Verizon and AT&T: Pay with a wave of your smart phone

In the beginning, there was cash.  Then we wrote checks for our purchases, which were quickly followed by credit and debit cards. And now there are -- smart phones?

The two largest U.S. wireless carriers, Verizon Wireless and AT&T Inc., are in talks to create a way for smart-phone users to pay for purchases with the wave of the device, according to a Bloomberg News article that quoted three anonymous sources who said they knew of the plan.

T-Mobile USA reportedly would have a small stake in the partnership too.

The touch-free technology would allow customers to make purchases in stores by way of embedded microchips in their smart phones and would be tested first in Atlanta and three other U.S. cities, but sources quoted in the Bloomberg article did not say when the trial would start.

More people are using their smart phones for online banking and tracking their finances, and 10% of U.S. consumers use them to make purchases on the Internet, double that of 2008, according to a recent survey of 5,000 consumers in 22 countries conducted by tax, audit and advisory firm KPMG.

"Mobile payments are the logical next step for consumers," said Mark Siegel, an AT&T spokesman, although he and company representatives of both AT&T and Verizon said there was nothing to announce on that issue.

The service poses a direct threat to Visa Inc. and MasterCard Inc., the two largest payment networks in the world, whose services currently account for more than half of U.S. consumer purchases, according to the industry newsletter Nilson Report.

The sources said transactions may be processed through Discover Financial Services and accounts  managed through Barclays Plc., whose spokesman, Kevin Sullivan, said in the article "facilitating mobile payments is a big part of the Barclaycards strategy globally."

Although the anonymous sources did not say how much each transaction would cost retailers, the Federal Reserve Bank of Boston said the new technology would cost $200 per reader, according to the Bloomberg article.

But the extra cost to retailers could be a trade-off if each transaction allowed them to upload advertisements and promotions directly onto people's phones.

-- Kristena Hansen

 
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