Tuesday, January 25, 2011

Will Apple, Google destroy Visa and MasterCard?

Change is coming faster than the bank card networks will either admit or acknowledge, according to some payment pundits in our office.

 

Apple has leaked that the next versions of the iPhone and iPad mobile devices will include support for near-field communications (NFC). The next gen of Apple mobile products will be released later this year.

 

For those not familiar with NFC, mobile payments are made by adding a small short-range wireless radio to cell phones that can be scanned by a retailer at the point of sale. Once scanned, the chip tells the phone to debit money from the customer’s checking or credit account paired with the device and send it to the retailer. No need for Visa or MasterCard, according to some retailers and telcos we’ve spoke with.

 

Network operators AT&T, T-Mobile and Verizon Wireless are backing a joint venture called Isis that will switch the transactions between retailers and their bank accounts.  Isis participants include Discover Financial Services and Barclaycard U.S. (MasterCard and Visa, the two biggest credit card issuers in the U.S., are not backing Isis, however.) Assuming our sources are right, adding Apple to the mix could be the catalyst to kick the NFC mobile payment ecosystem into high gear with retailers large and small.

 

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