Two New Mobile Payment Options, Two Entirely Different Approaches

Zong Mobile Payments

Both Sprint (NYSE: S) and AT&T (NYSE: T) have announced two new mobile payments services this week that aren’t anything alike.

Sprint’s mobile wallet links a phone to your various credit card accounts to make online purchases using a PIN number. Meanwhile, AT&T is trialling a service that will let users pay for digital goods using their phone bill. The two different approaches point to how nascent the industry is and how quickly new entrants, like mobile operators, are trying to elbow their way into a space currently dominated by the likes of Visa and MasterCard.

AT&T’s trial announced today is significant because it is one of the first U.S. carriers to lower the transaction rates in order to make carrier billing more feasible. Up until now, carriers have been charging 40 to 50 percent of a sale when a purchase appears on a phone bill. At that rate, a ringtone might be profitable, but other goods, like tickets or virtual goods, may not be.

In this trial, AT&T will be charging closer to what a credit card company charges. The experiment shows that AT&T believes that driving down costs may lead to more payment volume — a fairly novel concept among slow-moving carriers that were all too happy to take 40 percent. The lucky payment providers to benefit from AT&T’s experiment are BOKU, Zong and BilltoMobile. The service will be ramping up slowly with users capped at spending $25 a month on their bills. Exact terms of the deal were undisclosed.

Sprint’s announcement is entirely different. It is not enabling carrier billing, but rather allowing subscribers to link their phones to their credit card or Amazon (NSDQ: AMZN) Payments account to buy digital or physical goods. Customers will receive a universal PIN access code, and then when they are online and ready to make a purchase, they can choose “Sprint Mobile Wallet” at checkout, and enter the PIN. So far, SkyMall, Gameloft (EPA: GFT) and Namco are three merchants that have signed up for the service. Sprint has partnered with CardinalCommerce and said it will be free to subscribers with an Everything Data plan. Terms of deal were not disclosed, so it’s unclear if Sprint will be receiving a cut of revenues.

Sprint and AT&T’s announcements this week were preceded by announcements by PayPal, which launched a new mobile payments service for digital goods and new features on mobile, and news from AmEx that it hired two executives from Sprint to get serious about their mobile offerings.

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