U.S. operators team to build nationwide m-commerce network

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Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA will team to launch Isis, a nationwide mobile commerce network enabling consumers to make point-of-sale purchases via mobile device. Isis initially will focus on building out a Near Field Communications-based network enabling consumers to pay for retail goods and services by waving a radio microchip-equipped smartphone at a corresponding retailer reader unit; however, CEO Michael Abbott--a financial services veteran most recently with GE Capital--said the ultimate goal is the development of a mobile wallet solution that effectively renders obsolete cash, credit and debit cards, loyalty cards, coupons, tickets and transit passes.

Isis plans to introduce NFC payment services in key geographic markets within the next 18 months, partnering with Discover Financial Services to build the necessary mobile payment structure. Discover Financial Services' payment network is accepted at over 7 million merchant locations nationwide. Isis adds that Barclaycard US is expected to be the first issuer on the network, offering multiple mobile payment products. "Moving forward, Isis will be available to all interested merchants, banks and mobile carriers," Abbott said in a prepared statement.  

Reports of the Isis initiative first surfaced in August, with Bloomberg indicating Verizon, AT&T and T-Mobile will begin trialing contactless payments in mid-2011. Together, the three operators serve more than 200 million wireless subscribers across the U.S., and could pose a serious threat to traditional credit and debit service providers like Visa and MasterCard. "This is definitely a game-changer," industry consultant Richard Crone of financial advisory firm Crone Consulting LLC told Bloomberg this summer, explaining wireless carriers "are the biggest recurring billers in every market. They are experts at processing payments."

The worldwide mobile payments market--including purchases of digital and physical goods, money transfers and NFC transactions--will grow from $170 billion in 2010 to almost $630 billion in 2014 according to a recent forecast issued by Juniper Research. Citing growing smartphone adoption and increased app store traffic as catalysts behind the increase, Juniper also expects SMS-based ticketing schemes and mobile shopping efforts to boost the m-payments market in developed nations, while in developing regions, SMS-driven money transfers will increase at a rate of 30 percent year-over-year. Juniper adds that the top three regions for mobile payments--the Far East & China, Western Europe and North America--will represent nearly 70 percent of the global mobile payment gross transaction value by 2014.

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