Ex-AT&T Manager: Carriers, Card Schemes to 'Fight it Out'

A former AT&T manager involved in mobile payment sees battles ahead between the big U.S. mobile carriers and Visa Inc. and MasterCard Worldwide, as they fight it out for consumers in the emerging mobile-payment market.

Jon Beber, who headed AT&T Mobility's long-term data strategy, off-deck m-commerce group, before leaving late last month to become a consultant, said he believes the big telcos and big payment networks will “box it out in the marketplace” for the next couple of years.

AT&T and Verizon, along with T-Mobile USA, have formed a joint venture to roll out NFC-based mobile payment and other applications, although Beber was not directly involved in the planning of the JV at AT&T.

"I believe the long-term strategy could be really to create a boxing match, get your partners, get all of your friends in one corner, and perhaps Visa and MasterCard are going to be in another, and let’s see if Visa and MasterCard’s power in the marketplace from a payment perspective can compete with the power in the marketplace (of the carriers) from a communications perspective," said Beber, who also worked four years as a senior marketing manager for Verizon.

Beber was responding to a question from NFC Times after his presentation at the recent Mobile Payment Services conference in Barcelona. While not in the thick of the creation of the JV, Beber said he was privy to discussions about it while at AT&T. He declined to disclose details, however.

Beber said the battles could also involve such large U.S. retail chains as Wal-Mart and Target, and that the mobile carriers could eventually partner with these or other retailers and even with Visa and MasterCard on mobile payment.

"I think what’s happening, carriers are positioning themselves to more of a place of strength, trying to control the negotiations that they know are going to happen in two to three years."

The operators have already reportedly partnered with Discover Financial Services, a small competitor of Visa and MasterCard. Discover would offer its acceptance network, including merchants equipped to accept contactless payment. The U.S arm of British bank Barclays would be the banking partner.

The venture plans pilots during the second half of 2011 with full NFC phones. But at least one of the big carriers may launch with an NFC bridge technology before that, NFC Times has learned.

Beber said he believes mobile payment would only be part of the planned offerings of the telcos–perhaps a small part. Each of the telcos would offer their own mobile wallet loaded with payment and other services and would seek to differentiate themselves from the other operators. Beber did not talk about other applications that he believes the carriers will promote but did say he thinks the overall concept will be to deliver applications as part of a “cloud-based” system.

"The mobile wallet is essential to the long-term strategy of what the carriers are going to do," said Beber. “The mobile wallet is a gateway to personalization­–looking at establishing all of the information in a mobile cloud, and the mobile cloud is holding all of credit card information, all of your ACH information and perhaps even into your identity, driver’s license and any sort of telecommunications aspect you could put into a phone."

That is not to say that the payment application itself won’t be stored on the phone. The joint venture is planning to hire a trusted service manager to handle downloads and management of payment applications to secure elements in the phones, expected to be either SIMs or embedded chips–the latter likely for Verizon, which doesn’t issue SIM cards.

Even if payment is just part of the overall mobile wallet, it will likely anchor the wallets. And that will likely bring the operators into conflict with Visa and MasterCard and their big banking customers. The carrier joint venture is hiring or has already hired a CEO, who is expected to be from the banking industry, sources told NFC Times.

"My perspective is that right now, everyone is taking sides in the U.S. in particular, and I think what’s going to happen in the next two years is all these agencies are going to be fighting it out for the customer," said Beber. "I can’t speak directly upon this, but I would assume Visa and MasterCard are going to come out with a very, very strong response…So I really don’t expect Visa and MasterCard to play dead when it comes to dealing with the customers wirelessly."

He added later that Google and Apple could also enter the fray, and if they did, the strategy of the other parties could change dramatically. “Google and Apple could change everything.”

Visa and MasterCard have been developing bank-issued applications for NFC phones as well as bridge technologies, such as stickers and, in the case of Visa, contactless microSD cards.

Beber, who worked on such projects as international-money transfers and services involving payment that would show up on subscribers monthly bills, recently founded Atlanta-based Daedalus Consulting. He observed that: “It’s easier to get things done outside of AT&T than inside of AT&T.”

But he told NFC Times in late September that he was not consulting for the mobile carrier joint venture or any of the member operators.

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