First Data To Play Big Role In Cell Phone Payments

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First Data has some experience in the realm of cell phone payment processing. In 2007, the company invested in ViVotech's near field communication terminal and mobile commerce technologies. Then earlier this year, the company announced a partnership with Portland, Oregon based Tyfone to develop near field communications further.

"First Data continues to help drive mobile payments technology and sees it playing a major role in its evolution.  Serving approximately six million merchant locations worldwide, First Data is committed to helping our customers quickly and easily adopt important emerging payment technologies such as mobile commerce. While the recent news surrounding some of the mobile network operators joining to develop a mobile payment system is in early stages, we believe this is another indicator that true mobile commerce is on the horizon," the company said in an email from a spokesperson.

It may not end with cell phones as credit cards. Holland says the near field communication technology has the capability to hold all sorts of information including driver's license, medical data and loyalty cards.  "I could see a scenario where you get loyalty coupons sent in real time. So you're walking along a Starbucks, and you can redeem your coupon and pay in real time with your cell phone," Holland said.

Not everyone is convinced the technology will be a real threat to credit card giants MasterCard and Visa. Brian Riley, bank cards research director at The Tower Group, said the credit card industry is too overwhelming and well-established.

"There is two trillion dollars from card payments a year, one trillion is from protected funds (banks)," Riley said, who added the cell phone payment system would likely be for smaller funds. "I think it's unlikely you're going to buy a refrigerator from a mobile phone. It will be used for stuff like settling a bar tab I think. There will be some cannibalization of credit cards, but I think cash will be more displaced than anything else."

Holland also said there is no guarantee the reported deal between Verizon, AT&T and T-Mobile will be completed. "On paper it's a good deal. But when push comes to shove, are they going to work together and cooperate? In a three-legged stool, if one of the legs pulls out, it falls down," he said.

T-Mobile and AT&T would not comment on the specific rumor, but acknowledged mobile based payments is something their customers would appreciate. Verizon declined to comment.