Payment venture by Telco targets Visa and MasterCard

Some of the top U.S. mobile service providers AT&T, Verizon Wireless, as well as T-Mobile USA would let consumers use their phones to pay for their goods. They are working towards building a network that would enable users to use their mobile phones to pay their bills. This joint venture by Isis was announced formally on Tuesday, and they have plans to bite into the market shares of networks such as Visa Inc. and MasterCard Inc., which are currently into the credit card and debit card payment processing. The network, claimed by Isis, would be used by Discover Financial Services as its` approximately 7 million merchant partners in the U.S. The first lender to offer these mobile payment products would be BarclayCard.

There are many major mobile phone companies, banks, as well as card processing networks that are eager to enter the U.S. market, and these mobile payment products would ultimately be able to replace both the debit credit cards.

Consumers will be able to just "wave and pay", and they need not waste time in waiting to swipe and pay. The whole concept is to make payments quicker and simpler, and it has huge potential, considering that everything from train tickets to movie tickets could be purchased by just waving the phone and the need to carry a wallet would be totally eliminated.

These products have become a hit in places like Japan; though they are yet to take off in the U.S. In the U.S. there are approximately 150,000 merchants that accept these types of contactless payments, where consumers are allowed to either wave a phone or a card when they reach the payment terminal.

Isis has plans to expand its services and products to the rest of the merchants as well as mobile operators and banks. After being used by Discover and Barclays, this venture would be a coup for Discover, which is placed fourth place in the processing network, where Visa, MasterCard and American Express are ahead in the league.

Discover's Payments and Services head, Diane Offereins, stated in an interview that this would be a significant opportunity for them but did not reveal any specific detail in regards to the volume of business that Discover expected to gain through the participation of this venture.

Isis has also stated that its products and services would be introduced in certain areas within the next eighteen months.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.