Wireless Giants Scale Back Smartphone Payment Plan

NEW YORK — A new mobile payment service proposed by AT&T, Verizon Wireless and T-Mobile that would have allowed mobile phone users to buy items with their smartphones has been scaled back.

Last November the troika formed Isis — an alliance with credit card company Discover — to build their own mobile payment network where the carriers would set up their own payment and transaction network with fees based on purchases, coupons or advertising revenue.

The plan would have put the Isis group in competition with Visa and MasterCard, but according to reports has been shelved because of the difficulty of setting up a separate network.

According to the Wall Street Journal, the carriers are instead planning on setting up a "mobile wallet" that can store and exchange account information from credit cards that subscribers already use.

The new plan has the carriers talking with Visa and MasterCard to have them participate and are working with handset makers to embed the information and NFC (near field communication) technology into smartphones.

Discover will remain a partner in the new plan but the group said it is open to new alliances.

Although the idea of using mobile phones for purchases is not new, its commercial acceptance has lagged.

But companies like Google and RIM — both of which have embraced NFC chips in some handset models — are working with credit card companies and banks to allow people to use the new devices.

The companies are reportedly testing the service in New York and are planning trials in San Francisco and Atlanta in a few months.

A looming issue however is how subscriber information will be controlled.

According to the Journal, wireless companies want users’ information stored on installed SIM cards that would give them access upon activation.

But the smartphone makers want the data stored on the NFC chips which would cut carriers out of the payment process and give more leverage to device makers and the companies that develop the device operating system, such as Google.