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Print 35 comment(s) - last by Mike Acker.. on Aug 4 at 8:07 AM
System aims directly for Visa and MasterCard

There are four major wireless carriers in the U.S. today: Sprint, T-Mobile, Verizon, and AT&T. The four carriers battle fiercely to land exclusive handsets and customers in the mobile market. Getting three of those four major carriers to work together on one plan seems unlikely.

The only thing that could drive AT&T, Verizon, and T-Mobile to work together is money – the three carriers are reportedly working together on a new system that could replace credit cards with payments using a smartphone. Bloomberg reports that the carriers are working on the idea for a system that could rival MasterCard and Visa.

Payments on the system according to Bloomberg sources close to the deal would be made through Discover and Barclays, two of the four major credit card payment-processing firms. Credit cards are a huge business with MasterCard alone handling $2.45 trillion of credit card spending last year.

The system will be trialed at test stores in Atlanta, Georgia and stores in three other cities in America. The system would allow the user to pay for purchases at the register using a contactless system on their smartphones.

Analyst Richard Crone of Crone consulting LLC said, "This is definitely a game-changer." He continued saying, "[Wireless carriers] are the biggest recurring billers in every market. They are experts at processing payments."

There are similar services already in use in other countries with payments being processed using smartphones in Japan, Turkey, and in the UK. AT&T and Verizon are reportedly equal partners in the venture with T-Mobile having a smaller stake. Retailers are welcoming of a new processing system in hopes that the fees on purchased made using the system will be less than the 1% to 2% that credit card firms typically charge on each transaction today.

However, none of the sources that Bloomberg cites were able to give an indication of how much the processing fees would be or when the trials of the new payment system would start in test cities. Fees on credit and debit card purchases are a $40 billion per year industry.

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I swear...
By Shatbot on 8/2/2010 9:46:24 AM , Rating: 2
I have never seen a Discovery card in my life (other than in movies). 100% fact.




RE: I swear...
By brandonw407 on 8/2/2010 9:53:42 AM , Rating: 5
Perhaps that's because there's no such thing as a 'Discovery' card... just sayin'.


RE: I swear...
By Shatbot on 8/2/2010 10:04:37 AM , Rating: 5
So it's a Discover card?

quote:
"Sir, I would rather take two bits of string than your credit card. I would rather take a jar of pennies who's value is less than that of your bill. You are going to sit here and listen to all the things I'd rather take than your fly by night credit card"


RE: I swear...
By SSDMaster on 8/2/2010 10:13:48 AM , Rating: 3
Further evidence he's never seen one!

I enjoy the $200+ rebates I get every year from American Express. I give them business and they give me $$$. I'm glad there's people who can't pay their credit card bills every month so I get %5 cash back on gas/etc :) (I drive around 1000 miles a month for work)


RE: I swear...
By rzrshrp on 8/2/2010 10:39:43 AM , Rating: 3
That's probably going to get cut back now that the companies can't make as much money off of stupid people anymore, SSD.


RE: I swear...
By sigmatau on 8/2/2010 2:28:44 PM , Rating: 1
I guess the poor do get normaly associated with being uneducated but whatever floats your boat.

I see it more as the CC companies can't take from the poor and give to the rich.


RE: I swear...
By Suntan on 8/2/10, Rating: 0
RE: I swear...
By EricMartello on 8/2/2010 5:50:06 PM , Rating: 2
You got it backwards, bro...poor people who do have credit cards tend to be the ones who pay their card balance in full each month, or within a couple months. The people who carry around big balances tend to be what most would consider "white collar" workers. Small business owners also tend to lean on credit cards heavily and carry debt around.

One thing that you should know - those cash-back bonuses you get are coming out of the retailers' pockets. It really has little to do with the payment history of individuals. Cards that offer bonuses typically cost an additional 1-2% to the retailer, meaning that the average 2% transaction rate is now 3-4% for the same purchase.

It never ceases to amaze me how many people think that "being a good little customer" is somehow going to reward you with the banks - it's not. The banks are NOT your friends, they're just there to make money...and when times are tough, they lean harder on their "good" customers, just like Amex did for the last few years when the economy went down the shitter.


RE: I swear...
By Suntan on 8/3/2010 8:27:02 AM , Rating: 2
Bone up on your reading skills “Bro.” I never said “poor” people suffer, I said ignorant people suffer. In fact, I expressly commented that there are a lot of poor people that do know how to pay their bills and a lot of wealthy people that don’t. But I like how you spent the time to write back to me, telling me I’m wrong, when you’re saying the same thing I am.

And where did I ever say anything being a “good little customer?” If you’re smart, you take the time to understand the contract and then you figure out how to get the best out of it for yourself while avoiding the fees/penalties that the banks impose on the ignorant.

-Suntan


RE: I swear...
By Samus on 8/2/2010 8:23:25 PM , Rating: 2
Personally I find it more valuable to use my Amex Blue or Discover card than any of my other cards who have virtually no incentives to use them other than the fact they are (slightly) more widely accepted.

The problem is there are cards like the Southwest Airlines card from Visa (Chase) which costs $50 a year, but if you use it, it could net you three round trip flights a year + tons of drink coupons. That's like a $1,000 credit for spending/paying off $10,000 annually.

No card I know of gives you back 10% on anything. Unfortunately it has a 20% APR, rivaling my Amex and Discover cards COMBINED. And a lot of Visa/Mastercards are like that. They have the highest interests AND the highest fee's for retailers, but are unavoidable it seems as they have such a huge market dominance.

What AT&T/Verizon/T-Mobile could do with THIS system is have a credit to your phone bill (5-10%?) as an incentive to use the service to get it to really catch on!


RE: I swear...
By theapparition on 8/3/2010 12:55:02 PM , Rating: 2
quote:
They have the highest interests AND the highest fee's for retailers, but are unavoidable it seems as they have such a huge market dominance.

AMEX by far has the highest fees. That's why you see AMEX acceptance at far fewer locations than Visa/MC.

Visa and Mastercard are the lowest. Discover is competitive, but suffers from being the #3 in the market.


RE: I swear...
By Denigrate on 8/2/10, Rating: 0
RE: I swear...
By SSDMaster on 8/2/2010 10:16:28 AM , Rating: 2
No...


RE: I swear...
By Shatbot on 8/2/2010 10:24:44 AM , Rating: 3
My credit's fine - I'm living within my means!

When was the last time you heard the sentence "Is that on Mastercard or Discover?"


RE: I swear...
By Hydrofirex on 8/2/2010 11:01:33 AM , Rating: 2
I won't diss your credit, but I have been using a Discover card for a very long time. In fact it's probably my oldest revolving credit line. Simply put - they don't charge me an annual fee and they give a generous cash back program with very unrestrictive terms. There are others out there who have similar offers, but every other one I've ever researched has stupid caveats and caps. As an added incentive Discover offers 5% cashback on useful catagories throughout the year (Though these do have caps) and also offers ways to boost the cash back you have if you redeem it for partners promotional offers. They also have one of the nicest online interfaces I have every used.

Only problem, every once in a blue moon I run into a place that doesn't take Discover, so I do still carry a Visa or Mastercard for those rare instances.

I'm happy to see them involved in this!


RE: I swear...
By bhieb on 8/2/2010 11:19:52 AM , Rating: 2
I chose Amex Blue for the same reasons, no fees and from my understanding is they have no caps at all.

Plus we shop at Costco and Sam's and Discover screws you there (if they even accept them). From their terms.

quote:
Warehouse purchases (those made at select warehouse clubs, discount stores and their affiliates) earn .25%


RE: I swear...
By FITCamaro on 8/2/2010 10:54:48 AM , Rating: 2
Small businesses typically hate discover because they are the slowest to pay and charge the highest fees. At least according to the ones I've spoken to. My old mechanic has told me it used to take over a month for Discover to pay him when customers would pay with Discover. And he got screwed out of several grand worth of work when a customer made a BS complaint, contested the charges, and Discover gave him no opportunity to defend the charges. So he stopped accepting the card.

Honestly I don't see why credit card companies charge businesses to accept their cards. They make more than enough off interest and it only discourages use of the card.


RE: I swear...
By bhieb on 8/2/2010 11:28:32 AM , Rating: 2
quote:
Honestly I don't see why credit card companies charge businesses to accept their cards.

Because they can. I for one will not shop at a place that does not accept my card. So it behooves the company to pay the fee if they want my business.
quote:
They make more than enough off interest and it only discourages use of the card.
As a 401K holder (and thus a shareholder of some of these) I disagree they can (and have an obligation to) always make more please. Also this has not always been the case, there was a time when most people were responsible with their cards and did not carry balances forward (I still don't).

It may discourage some merchants from accepting the card, but they do so at their own peril. I agree it is a pretty good racket they have going, but I do believe it increases sales not decreases them.


RE: I swear...
By Fracture on 8/3/2010 1:58:37 PM , Rating: 2
Your mechanic probably tried tacking on charges without approval/authorization. Merchants can sometimes be the biggest crooks since they have the potential to enter in CC #s manually (memorize a card and rack up false charges). With a car shop I suspect it gets into grey areas, since the customer might not have approved charges over a pre-defined limit.


RE: I swear...
By phatboye on 8/2/2010 12:29:11 PM , Rating: 2
My credit is very good and I've had plenty of offers from both Discover and American Express I've just never had the urge to get one as very few places accept either card.


RE: I swear...
By Suntan on 8/2/2010 2:07:37 PM , Rating: 2
quote:
I've just never had the urge to get one as very few places accept either card.


I would be interested to know where all these places are.

I use the Discover card as my main means of payment. Only have to use the VISA based check card maybe once every couple months.

-Suntan


They work together on other things
By nafhan on 8/2/2010 11:47:54 AM , Rating: 3
quote:
Getting three of those four major carriers to work together on one plan seems unlikely.
Don't forget, they collude on text messaging and data plan prices among other things!




RE: They work together on other things
By ebakke on 8/2/2010 12:30:05 PM , Rating: 2
Care to back up those allegations with something more than anecdotal "evidence"?


By nafhan on 8/2/2010 3:58:11 PM , Rating: 2
Calm down... I love major telecom conglomerates just as much as the next guy.
Anyway, even though my post was meant to be sarcastic, the FCC and DOJ has looked into this stuff before. I don't think they reached much of a conclusion, but collusion is pretty hard to prove without some sort of "smoking gun".


progress?
By rzrshrp on 8/2/2010 10:25:04 AM , Rating: 2
With the phone companies on one accord and with such a noble motivator as money, this will probably see the light of day. I'd still have to see how it's implemented to decide if I'd use it, of course, but I'd like having the option.




RE: progress?
By VultureTX on 8/2/2010 1:40:35 PM , Rating: 2
it all about rate and fees.

Every new system that is Epayment has had higher fees for merchants than the base Visa (1.86% + $.28 per trans)

This spring I tried to use the Iphone Square and they turned out to be a VAR with an app. And not even a competitive one. Paypal bump app , the same.

I talked to my AMEX merchant rep and their system of instant payment did nothing new for the person wanting to buy a membership from us.

All we wanted was a system that gave us a verified payment and the info (name/address/email) on the payer to register them for our event. in the end a VISA merchant bank got our money (thousands for one weekend of processing) for rates and least hassles. But no paypal bumping, squareup transaciton, or cell phone emoney for our attendees because it costs too much.


Finally
By Denorek on 8/2/2010 10:38:19 AM , Rating: 2
Japan has contactless payment system built into phones for a while now.... Grocery and mass-transit systems (train, subway, buses) are all compatible with this..

Can't wait to leave my wallet home, and just carry my phone around.....




RE: Finally
By eddieroolz on 8/2/2010 3:45:24 PM , Rating: 2
I wished that the carriers would have adopted the same system as Japan, but too bad that's not happening. All the engineering and research has been completed on that platform - why waste time building another? That's my train of thought.


Discover has some of the highest fees though
By HrilL on 8/2/2010 11:50:52 AM , Rating: 2
AMX and Discover have some of the highest fees. for some purchases it can be as high as 4%. Visa and Master Card are around 2% I doubt this will save store any money and will likely cost them more because adding another middle man never makes things cheaper. Eliminating the middle man makes things cheaper.




By Suntan on 8/2/2010 2:03:54 PM , Rating: 2
quote:
Eliminating the middle man makes things cheaper.


Maybe I would care if the store would offer me a discount if I pay in cash.

-Suntan


w00t!
By afkrotch on 8/2/2010 8:33:18 PM , Rating: 2
Alright, we're only about 10 years behind the Japanese.




RE: w00t!
By BigJim on 8/3/2010 1:38:28 AM , Rating: 2
In Japan the government told the carriers and payment processors to line up, that's how it works in Japan. If you think Japan is a paradise, read The Enigma of Japanese Power.

Anyway, maybe the USA will now catch up with Japan economy, and start a 10+ year stagnation...


Technology?
By cjohnson2136 on 8/2/2010 11:28:14 AM , Rating: 2
Ok I know they have this in other countries but does anyone here know how the technology works. Like does the phone send a signal to the a device hooked up to the cash register cause I am just confused in how this whole thing would work.




Wow....
By Alexstarfire on 8/2/2010 5:31:12 PM , Rating: 2
The US has been playing catch up in the electronics department for quite a while. This is just something else to show how far behind the US really is.




not competent
By Mike Acker on 8/4/2010 8:07:47 AM , Rating: 2
none of these people are competent to design a payment card system for phones

the first requirement is that the merchant must never have the account numbers needed to make a charge. this is necessary to reduce the attack surface and to reduce fraud

second, secure communication from the cell-phone to the POST may be an issue the problem being that proper authentication and encryption have not been deployed -- even though the technology for this has been available since Zimmerman released PGP

in the end we will need an ANSI standard that makers MUST adhere to under penalty of law. the standard would require heavy peer review by people like Zimmerman -- who know what they are doing.




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