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AT&T, T-Mobile USA, and Verizon Wireless have launched a joint venture to build a national network for subscribers to make in-store purchases using their smartphones.
The wireless carriers plan to roll out the mobile payment network, called Isis, to "key geographic markets" over the next 18 months. Michael Abbott, a former financial services executive with GE Capital, has been named chief executive of the new venture, introduced Tuesday.
The goal of Isis is to eventually go beyond just making purchases at the cash register. "While mobile payments will be at the core of our offering, it is only the start," Abbott said in a statement. "We plan to create a mobile wallet that ultimately eliminates the need for consumers to carry cash, credit, and debit cards, reward cards, coupons, tickets, and transit passes."
The three carriers collectively bring more than 200 million potential customers to Isis, which is working with Discover Financial Services in developing a mobile payment infrastructure. Discover currently runs a credit card network accepted at more than 7 million merchant locations nationwide.
Barclaycard US, a part of the bank Barclays, is expected to be the first credit issuer on the Isis network. However, Isis will be available to all merchants, banks, and mobile carriers.
Using a mobile phone to make purchases is not new. Such services have been available in Japan and other countries for some time. The system typically uses a short-range, high-frequency wireless technology to enable a person to make a purchase by bringing a mobile phone close to a receiver.
The fact that three wireless carriers that are normally fierce competitors are willing to join together to start a mobile payment network is reflective of the potential profit in bringing such financial services to subscribers.
However, the latest venture has some glaring holes. For one, neither of the largest credit-card companies, MasterCard or Visa, is involved. Both are in the process of building their own mobile payment networks and are not inclined to join someone else's.
"There's no unique technology angle that's been brought here," James Anderson, head of mobile product development at MasterCard, told The Wall Street Journal.
"The best option for mobile operators is to work with a widely accepted network like Visa instead of asking customers to a adopt a new relationship," Visa's head of mobile, Bill Gajda, told the Journal.
In addition, Sprint Nextel, the third-largest wireless carrier in the U.S., behind Verizon and AT&T, respectively, is looking at several options for providing subscribers with a mobile payment service.
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