AT&T, Verizon, T-Mobile Join for Mobile Commerce

By Gary Kim, Contributing Editor

Some observers might have thought the very idea improbable, but Bloomberg reports that AT&T, Verizon Wireless and T-Mobile (News - Alert) USA are planning a major mobile commerce venture that would allow mobile customers to use their devices as a replacement for a Visa or MasterCard debit card or credit card. 

Blooberg says Discover Financial Services and Barclays Plc are partners in the venture as well. The reported venture would be significant for several reasons. If it succeeds, the effort would represent a material threat to the existing credit and debit card businesses operated by Visa and MasterCard.

The venture also would show that fierce mobile rivals can work together in mobile commerce when it is mutually beneficial, even though many observers might have argued such collaboration would “never” happen because of the fierce rivalries between the companies. 

The trial could lead to a major effort to enter the mobile payments business, and would represent a major move by the mobile providers to diversify their revenue streams away from simple access and subscription fees. “Contactless” payment systems, widely used in Japan, for example, are seen as a potentially lucrative revenue stream for mobile providers. 

Visa and MasterCard handled $2.45 trillion worth of consumer transactions in 2009. That generated something on the order of $40 billion in annual fees for Visa, MasterCard, American Express (News - Alert) and Discover, or about one percent of the value of the retail transactions. 

Transactions would be processed through Discover’s payments network, currently the fourth-biggest behind Visa, MasterCard and American Express Co. Barclays would be the bank helping to manage the accounts.

Some observers had thought the major carriers would not be able to work together, or would try to focus on micro transactions. This venture is much more ambitious than that, and shows that fiercely-competitive rivals can work together when working together is the best way, perhaps the only way, to carve out a potentially huge new transactions business that takes advantage of the assets the leading mobile providers possess.

Customer relationships, “always with the user” presence, strong brand names and experience with billing lots of transactions are some of the carrier assets. 

But it appears the involvement of Barclays and Discover will address some crucial issues, such as which entities will be responsible for managing inventory and obligations. 

The move is a big step for the carriers. 

(source: http://fixed-mobile-convergence.tmcnet.com/topics/mobile-communications/articles/93901-att-verizon-t-mobile-jo-for-mobile-commerce.htm)