Visa and MasterCard Both Make M-Payments Moves

Activity around mobile payments is picking up significantly this summer, and while the major US carriers recently announced a plan that would sideline the two payments processing giants, Visa and MasterCard, both of these firms has announced new initiatives in the past few days.

Focal Points:

• Working with Visa, Bank of America will roll out a mobile payment trial based on smartphones rather than specialized gadgets, incorporating the NFC (Near Field Communication) swipe technology. Apple recently became the latest device maker to take a keen interest in integrating NFC in smartphones, a process led so far by Nokia. The BoA trial will kick off next month and last for the rest of the year. Selected employees and consumers in the New York area will install NFC chips in their mobile devices. This program will come several months ahead of the planned trial by AT&T and Verizon Wireless, called Mercury, which will take place in mid-2011 in Texas, Utah and other markets. Processing for Mercury will be done by Discover Financial Services.
• "We see this as a critical capability given the increasing acceptance and adoption of bank services on the phone," head of electronic commerce Laurie Readhead told Reuters.
• The worldwide mobile payments market, including purchases of digital and physical goods, money transfers and NFC transactions, will grow from $170bn in 2010 to almost $630bn in 2014 according to Juniper Research.
• Meanwhile, MasterCard has agreed to acquire DataCash, a European payment service provider, for $520m. The smaller company processed more than 240m ecommerce transactions in 2009, and boosts MasterCard's m-commerce presence, said the firm.

In its statement, the company said it planned to "expand DataCash's platform and launch MasterCard's new generation of ecommerce, mobile commerce and other payment products, enabling merchants to quickly accept these new forms of payments with minimal integration challenges." MasterCard also indicated that the DataCash acquisition will bring improved fraud screening, a barrier to adoption of m-commerce.