The nation's two largest cell phone operators are forming an alliance with the credit card company Discover Financial Services and global bank Barclays to create a new service that could displace credit and debit cards with smartphones, the news agency reported. T-Mobile USA, the fourth largest wireless operator in the U.S. is also believed to be a minority partner in the venture. AT&T and Verizon Wireless are believed to be equal partners in the venture with T-Mobile holding a smaller stake in the venture, Bloomberg also reported. The companies are supposedly gearing up to test the new service in stores in Atlanta and three other cities, according to unnamed sources cited by Bloomberg.
Representatives from AT&T and Verizon Wireless declined to comment on rumors of the new alliance.
The way the service would work is that consumers would be able to use their smartphones, instead of plastic credit cards to make purchases. Discover would process the payments and Barclays would be the bank that helps manage the accounts, the Bloomberg story said.
Using cell phones to pay for things is not a new concept. Similar systems already exist in Japan, Turkey and the U.K. The technology has also been tested in the U.S. for several years. Nokia and MasterCard launched a trial in the U.S. in 2003. In 2006, Cingular, which is now AT&T, teamed up with Nokia and financial institutions Citigroup and MasterCard to trial the new phones that have MasterCard PayPass contactless payment capability.