Phone operators look to replace credit cards

  • AT&T and Verizon are following the lead of overseas operators and introducing a wireless electronic payment system.

    According to Bloomberg, they plan to partner with T-Mobile USA and are in talks with Discover Financial Services and UK bank Barclays, over a scheme to let customers pay at the till with a wireless swipe system based on RFID or similar technology.

    Similar schemes operate in many countries worldwide, including Japan, Scandinavian countries, the UK and Canada - but uptake in the world's biggest market could really help the technology take off.

    Phones are equipped with a near Field Communication chip - costing about $10 - which sends a wireless signal to the retailer's reader, which costs around $200. US phones are currently not equipped with the chips.

    The group plans to test the system in four US cities over the next year. Purchases can be made with a wave of a smartphone, and will be processed through Discover's network. The actual payment will likely be made through the customer's cellphone bill.

    Similar systems are claimed to be a good deal faster than using a plastic card. They're also claimed to be at least as secure: the RFID tag can be shut down remotely in the event of the phone being stolen.

    The companies won't confirm the plans.

    The service could represent a threat to Visa, Mastercard and American Express - by far the largest payment networks in the world. Discovery currently ranks fourth.

    Mastercard and Visa have previously attempted to market similar systems, with the chip embedded in a phone case.