With word spreading rapidly of a mobile contactless payment alliance between AT&T and Verizon—with T-Mobile thrown in, pretty much so that the first two carriers have someone to complain to about each other—the analysis generally has leaned to this being groundbreaking. In reality, this grouping is not likely to last long, nor will it make much of an impact while the companies stick it out.
The alliance—which will reportedly include banker Barclays and payment network Discover Financial Services and will “kick off soon with a pilot program at retailers in four selected cities, including Atlanta,” according to The New York Post—does bring together some key players in an attempt to challenge Visa and other card brands. But this deal has all the markings of something that five executives sketched out–five people who will never get within 5,000 yards of the conference rooms where the hard details will be worked out.
“It’s widely known that the limiting factor to NFC/contactless adoption has been that the very large players have not been able to agree on how the proceeds from this new payment type should be shared. Actually, they don’t even agree that it should be shared,” Ablowitz said. “Each of the major players is looking to make sure they can extract maximum value from this inevitable new paradigm. The major card brands and banks say, ‘It’s our consumer. We have the trusted financial relationship and we shouldn’t have to share interchange.’ The carriers say, ‘No, it’s our customer. We are the ones who supply and support the phone, so we deserve a (big) piece of the pie.’ The retailers then turn around and say, ‘This is just payment. The whole reason our customer is paying for something is because they’re loyal to our store. We pay too much already for payments and this new technology should lower our costs substantially. And, by the way, we’re fresh off a victory in Congress, and we’re going to get this whole interchange thing fixed there.'”
Fierce RetailIT, August 5, 2010
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