In the near future, Smartphones are expected to replace the innumerable credit and debit cards that currently hold a place in the customer's wallet in the United States. T-Mobile, along with AT&T and Verizon, is planning to develop a new payment system through mobile phones, the functionality of which will be similar to that of the Smartphones. Three main people associated with the project have said that this new system can pose a threat to the current card transaction processing giants, Visa and MasterCard.
The three companies that are working in collaboration with each other have plans to test this new payment system across a few stores in at least four cities across the United States, including Atlanta. However, a proper timeline outlining the various phases of development and implementation have not yet been provided by the three companies involved. Once the trial of the new system is in place, it will be considered as one of the biggest efforts to encourage mobile payments in the country.
Richard K Crone, an industry consultant, has said that this system will surely bring about a huge change in the credit card industry. He went on to say that the mobile service providers are among the biggest billers in almost every segment of business. Most of these carriers have expertise in processing payments over the phone.
Though the technical details of the project are still a little hazy, it is understood that this service would enable consumers to pay for the purchases made in various stores by just holding their smartphones in front of the electronic reader. The transactions made using the mobile phones will be processed by Discover Financial Services which is currently the fourth largest payment network in the United States, lagging behind Visa and MasterCard which hold the first and second place respectively and American Express which is the third place holder.
People associated with this big project, on the condition of anonymity said that the accounts will be handled by Barclays, which is a bank based in London. The representatives from Discover and Barclays refrained on commenting about this issue.
Currently retailers are wary about the high interchange fees levied on them by MasterCard and Visa. The new billing system might provide them the much needed respite from their woes. Retail Industry Leaders Association's Brian Dodge said that the implementation of the new payment system will provide the much needed competition in the payment market which is currently missing.