Here’s our two cents about this news topic:
It’s interesting to observe that these major telecom companies (AT&T, Verizon Wireless, T-Mobile) would choose to address the payment problem on their own, rather than leverage the compentancies of the major credit card companies. Why would they want to walk down this path on their own?” asks Daniel Mattes, internationally recognized IT and payment expert and founder of Jumio.com
Credit cards have been the world’s most convenient payment solution. In 2009, there were 56.4 billion credit, debit and prepaid card transactions, totaling $3.39 trillion dollars. (Nilson Report, February 2010.) Credit card companies are doing a great job at “card present” transactions, by providing fast processing, low fees for merchants and excellent service for the customer. In the online world, however, where there are “card not present” transactions taking place, significant improvement is needed. According to Javelin Strategy & Research (2009), the annual cost of credit card fraud is $191 billion. Compare this to the consumer energy costs of the entire USA per year which is at $200 billion. What’s missing is that credit card companies have not been able to convince the PC and smartphone industry to equip their devices with a credit card reader.
The world of online payments places a heavy burden on the merchants. “Not only do online merchants have to deal with the cost of the fraud itself, but they also bear the cost of maintaining a security and fraud protection team, and face the opportunity cost of lost purchases and customers due to false postives, as well as paying higher transaction fees overall as compared to brick and mortar retailers,” says Daniel Mattes.
It seems that the big credit card players have rested too long on their laurels. Now is the time for innovation and for merchant and customer friendly service.