Mobile payment security apps coming to NFC-ready smartphones

Visa, MasterCard, American Express, Discover all expected to offer apps

Four major credit card companies are working with the Isis mobile wallet venture to install mobile payment security applications on upcoming NFC-ready smartphones in the U.S.

Visa expects to license its own software, called PayWave, to the upcoming near-field communication (NFC) smartphones sold by the three wireless carriers in the Isis consortium, a Visa spokeswoman said yesterday.

Isis, comprised of Verizon Wireless, AT&T and T-Mobile USA, announced plans earlier this year to roll out contactless payments using NFC-ready smartphones in trials in early 2012 in Salt Lake City and Austin, Texas.

The scheme would replace credit card and cash payments with an specially equipped smartphone passed near an NFC terminal. Phone users would basically have the same credit from a bank as with an existing credit card.

In late July, Isis announced it would launch mobile payments with Visa, MasterCard, Discover and American Express, but didn't offer many details on how the relationships would work.

All four of the credit networks offer contactless payment software, which today is more widely used on cards containing chips than in smartphones . Isis officials said in July that having all four on board will increase consumer and merchant acceptance of NFC-ready smartphones used to make point-of-sale purchases.

Isis still must forge relationships with banks that work with the credit networks and has not announced which banks will be involved in the trials. When first launched, Isis worked with Barclays, but later said it would work with other banks.

The Visa spokeswoman said on Thursday that customers of the three Isis carriers will have the opportunity to buy smartphones preloaded with its PayWave technology. MasterCard, which calls its contactless payment software Pay Pass, and Discover and American Express are expected to follow the same approach.

With the various contactless payment applications, customers would likely launch the application on a smartphone with a single touch, and then enter a PIN before waving it at a contactless terminal to make a payment at a retail outlet.

PayWave is software that supports EMV (Europay MasterCard Visa)-level security , considered to be the payment industry's highest level of encryption technology, Visa says on its website . Visa uses it on smartcards, key fobs and some mobile phones. In a PayWave trial, consumers in Malaysia pay at a retail store or other point of sale by waving a smartphone with NFC at an NFC terminal.

In May, Visa announced plans to launch a digital wallet system in the U.S. and Canada this fall one that allows e-commerce payments from a phone's Web browser , as well via NFC-equipped phones.

Visa is the largest of the credit card companies, handling more than half of U.S. credit card transactions.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed . His e-mail address is .

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