Consumers who want the ease of paying without using cash, but don’t want to actually accumulate credit card debt, might soon have a new solution to their problem.
According to a report from Bloomberg, AT&T, Verizon and T-Mobile are teaming up with Discover Financial Services to start offering a system that uses consumer’s smart phones as the payment method. The report said that the new initiative is designed to cut into the profit margins of major credit card networks like Visa and MasterCard.
Bloomberg said the system is expected to work by letting consumers place their smartphone in front of a wireless scanner, which then reads an embedded RFID chip and charges their account.
A report from the Wall Street Journal said that the carriers’ new plan will use a technology called Near-Field Communication, which is already used at point-of-sale terminals like gas pumps or cash registers at drug stores. Previous to this, companies that manufacture smartphones have been reluctant to install such technology in their handsets because few vendors offer NFC payments.