(June 24, 2009) Visa Inc. has a struck an agreement with NeuStar Inc., a key player in the wireless telecommunications industry, that could enable financial institutions to develop more payment services for mobile devices.

Created in 1998, Sterling, Va.-based NeuStar plays a unique role in the phone business. It acts as a neutral clearinghouse and has databases that enable carriers to successfully route calls in North America. Its directories and systems manage area codes and phone numbers and facilitate local number portability. And through the GSM (Global System for Mobile communications) Association, NeuStar links more than 4,000 wireless operators.

The new agreement thus opens an important portal for Visa as it and other payment networks develop the mobile-payments market. “It gives us a single point of contact or connection to wireless service operators,” Prakash Hariramani, senior business leader for mobile initiatives at Visa, tells Digital Transactions News.

Visa did not unveil any specific new products or services when it announced the NeuStar alliance this week. “We’re in the early stages of our partnership,” says Hariramani. But possibilities include the ability by consumers to transfer money from a Visa account to a wireless account. Doing so would easily facilitate payments for cell-phone minutes, or top-ups, Hariramani notes. Such a service could be especially popular overseas, where the prepaid model of cell-phone payments is much more common than in the U.S., where the post-paid model dominates.

Another possible use by financial institutions of NeuStar’s technologies: the ability to immediately identity a mobile device’s capabilities, including such things as screen size, thereby enabling them to offer mobile-payments users a better experience.

Jon Paisner, senior analyst at Boston-based Yankee Group Research Inc., says the NeuStar pact will save Visa an enormous amount of work as it develops its global mobile-payments business. “Getting those individual agreements [with carriers] in individual countries takes too long,” he says.

Visa struck the agreement with NeuStar to open technological and operational doors. It doesn’t address a fundamental financial issue that’s slowing development of mobile payments in the U.S.: the lack of an accord between the payments and telecommunications industries about how to split revenues. “There’s no black and white answer here,” says Hariramani. But, pointing to Malaysia as an example, he says resolution of the problem is possible. It was in Malaysia in April that Visa launched the first commercial mobile-payments service featuring near-field communication, the interactive technology that allows mobile phones to be used as contactless payment devices.