Visa Agrees to Work with GSMA on Standards for Mobile Payments

In a move that may indicate a thawing of relations between mobile operators on the one hand and banks and card networks on the other, Visa Inc. announced on Wednesday it will work with the London-based GSM Association to develop standards for mobile payments and handset-based money transfers. The first set of standards, which will relate to money transfers, will likely become available “within the next few months,” Tim Attinger, global head of product development at Visa, tells Digital Transactions News. These standards are coming first because of a standing relationship between Visa and the GSMA to enable mobile remittances, he adds. Visa and the GSMA, a global trade association representing more than 750 wireless carriers and another 200 handset makers, software vendors, and other companies, also plan to develop standards for a wide range of financial activity on mobile phones, including remote payments to merchants, payments at the physical point of sale, payment acceptance by merchants, alerts and offers, and transaction look-up. Attinger says he's reluctant to predict when these standards will be ready. “We'll pace them,” he says, according to which markets show the strongest potential for widespread adoption. The standards are intended to allow mobile operators to more readily introduce new payment services in local markets, Attinger says. They will include rules for a wide range of functions, such as enrolling consumers, performing product rollouts, and entering transactions in the Visa network. “Business models and standards should help us drive commercialization,” says Attinger. The standards will also carry the force of rules. “These are more than just best-practices guidelines,” Attinger says. “There are standards for how you do an authorization transaction, so there will be the same level of scrutiny around how to send instructions to the Visa network for a mobile money transfer.” This cooperation between the world's largest card network and a trade association representing carriers serving approximately 80% of mobile subscribers worldwide could indicate that banks and mobile networks are beginning to resolve longstanding differences that have hampered the development of mobile payments. Most of these differences concern the sharing of transaction fees between carriers and banks. “It's a good leading indicator of how we're finally starting to skin it,” says Attinger, referring to the inability of banks and mobile operators to reach agreement on business models for mobile payments. Some observers are encouraged just to see Visa working so closely with a mobile-carrier consortium. “This looks to me like a necessary step, where the payments network and the [mobile network operators] learn to work together,” says George Peabody, director of the emerging technology advisory service at Maynard, Mass.-based Mercator Advisory Group. “It's a trust-building experience. Right now in the U.S. they're not talking.” Peabody sees mobile-operator cooperation as particularly crucial in developing near-field communication (NFC) services for POS payments and for mobile money transfer. Embedded with NFC chips, mobile phones can link to contactless readers to allow consumers to make purchases from electronic wallets provisioned over the air to their phones. In global money transfer, Peabody says, extensive agent networks are necessary to allow users to load prepaid accounts with cash that recipients can access at remote agent locations. Mobile operators have typically developed these agent networks to sell prepaid air time. Although the GSMA represents carriers that operate GSM networks, Attinger says the standards will be adaptable for use by networks using the rival CDMA standard for mobile telecommunications.