AT&T, Verizon, T-Mobile Enter Mobile Payments Arena; MasterCard Plans for Contactless Future; Fed Helps Mobile Payments Get on Track

MasterCard Plans for Contactless Future

August 4, 2010

NFC News - MasterCard’s stock dropped 3.6% on the recent announcement Verizon and AT&T are partnering with Discover and Barclays to launch mobile contactless payment services, but the company says it has its own ventures in diversified payments.

According to Ajay Banga, President and CEO of MasterCard, the company currently has 20 pilot and commercial roll outs of contactless payment around the globe, including a mobile payment pilot in the UK with Barclays and Orange and another in Tokyo with Guarantee Bank.

MasterCard is also offering contactless mobile payment in the US with Citi in the form of PayPass stickers attached to the back of the user’s mobile phone.

Additional programs are underway in Korea, Brazil, Canada, India and Singapore, says Banga. In addition, the company also offers a money-send service in which customers can make purchases or transfer money person to person using a mobile phone or internet browser.

AT&T, Verizon, T-Mobile Enter Mobile Payments Arena

August 2, 2010

NFC News - AT&T Inc., Verizon Wireless and T-Mobile USA are reportedly teaming up to launch a contactless mobile payment pilot in Atlanta and three other cities, according to bloomberg.com.

Bloomberg calls the venture, which is expected to include the support of Discover Financial Services and Barclays Plc, a “threat” to Visa and MasterCard, the world’s largest payment networks.

If the system works, smart phones could replace some 1 billion payment cards in use in the U.S, which account for nearly half of all consumer purchases.

Richard Crone of California-based Crone Consulting LLC calls the move “a game changer,” and points out that mobile carriers are the biggest recurring billers in every market, making them experts at processing payments.

Additionally, retailers who are sick of dealing with ever-escalating swipe fees from Visa and MasterCard may be eager to give the new system shot, says Bloomberg.

Meanwhile, MasterCard and Visa have been employing their own mobile solutions. In June, MasterCard teamed up with Citigroup to produce contactless PayPass stickers that can be affixed to mobile phones. Visa and DeviceFidelity also developed their own solution earlier this year that works with existing smart phones, including Apple’s iPhone.

Verizon, AT&T Look to Trial 'Mercury' in Several Cities

August 9, 2010

NFC News - AT&T and Verizon will launch trials of their new contactless payment system - codenamed Mercury - at markets in Minneapolis, Atlanta, Salt Lake City and Austin, Texas, according to fiercemobilecontent.com.

Participating customers will be able to pay for a variety of goods and services with NFC-enabled smart phones operating on Discover Financial Services’ payment network.

T-Mobile also has a stake in the venture, as well as UK’s Barclays, who will help manage users’ credit accounts.

Trials are expected to commence in mid-2011.

Fed Helps Mobile Payment Get on Track

July 28, 2010

NFC News - The Federal Reserve Banks of Atlanta and Boston have helped a number of leading telecom and e-payment companies reach a consensus on several issues dividing the mobile payments industry, according to Digital Transactions.

The Feds have to date hosted three of these meetings consisting of about 20 industry representatives, including software companies, processors, merchant and wireless trade groups, carriers, banks, and card-network companies.

A fourth meeting is scheduled for October, during which the group will attempt to produce a paper mapping out a strategy for advancing mobile payment, which up until now has been hindered due to disagreements between companies on technical matters.

These arguments have concerned security, where e-wallets should be kept, division of transaction fees, and most importantly, dynamic authentication, which is the process of generating on-the-spot unique identification credentials for transactions, according to DT.

The hope is that the resulting paper can be presented at conferences and circulated throughout various relevant industries to stimulate cooperative discussion on mobile payment.

Report: 'Sticky' Mobile Payment a 2010 Reality

July 16, 2010

NFC News - Reportlinker.com has released a market research report on the use of contactless payment stickers in place of built-in NFC phones to make mobile payments.

The report,”Making Contactless Payments Sticky with Stickers,” identifies the key market drivers for contactless stickers and the issues that must be overcome to make them a real, viable solution in the hands of consumers.

According to the report, contactless stickers offer a way for card associations, issuing banks, and merchants with stored value programs to eliminate mobile network operators and handset manufacturers from the distribution chain, which will help free up the logjam currently keeping NFC technology from widespread commercialization.

Although certain business model issues still exist, contactless stickers’ ability to eliminate strong players in the value chain makes them a 2010 reality, according to the report.

UK Retailers Calling for Lowered Processing Charges on Contactless Payments

July 7, 2010

NFC News - Retailers in the UK are lobbying for emerging payment technology, viz. contactless payment, to be cheaper to process than current debit and credit cards, which are running them hundreds of millions of pounds in processing fees a year, according to The Register.

According to the British Retail Consortium (BRC), each cash transaction costs retailers an average of 2.1p to process ($.03), while debit card transactions cost 8.9p ($.13) - nearly doubled from five years ago - and credit card transactions cost a whopping 33p ($.50).

A 2009 survey from the BRC also found that 44% of purchases in the UK were made with debit cards, with cash lagging behind at 32%.

Retailers are concerned that contactless debit, credit and mobile payment will end of digging them an even deeper hole, especially considering that contactless payments are geared towards the purchase of small value items.

Stephen Robertson, director of the BRC, says the processing fee trend should be going down and not up due to improved technology and efficiency:

“‘Contactless’ systems can bring benefits, but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can’t expect to maintain those excessive charges as numbers of non-cash payments grow.”

Yet many retailers are dealing with just that. According to a BRC statement, some banks are even rolling out new “premium” or “World cards” that require additional interchange fees of between 0.7% and 0.9% on top of the average 0.75% of the transaction value that the retailer previously paid.

Contactless Mobile Payment on the Rise in China

July 23, 2010

NFC News - The mobile payment market in China is expected to grow dramatically in the next two years, with the number of users exceeding 100 million by 2011, according to The Global Times.

IT research firm Analysis International reports that last year there were 72.8 million mobile payment subscribers in China, of which only 27.16 million used NFC-enabled contactless payment. This year, however, that latter number is expected to nearly double to 49.16 million contactless users, pushing the whole mobile payment community past 100 million.

According to analyst Li Wei, last year, the mobile payment market in China was worth $293 million. This year it is expected to jump to $441 million, and 2011 could see a further increase to $771 million.

“The on-the-spot mobile payment will create a market with great growth potential in China. We are looking it as one of our most bourgeoning income sources during the next few years,” said Gao Xiang, VP of Watchdata System, the world’s 5th largest SIM provider.

Watchdata has already sold over 500,000 mobile payment SIM cards this year, and is expected to ship 700,000 more by the end of 2010, earning the company $14.73 million in revenue.

According to Global Times, 785 million people are now using mobile phones in China - just over half of the population - many of whom are not accustomed to using bank cards for transactions. Mobile payment therefore offers a natural alternative to cards and cash, and we can expect to see solid market growth in China over the next few years.