BofA, Visa to test smart-phone payments
Bank of America Corp. and Visa Inc. plan to begin a test program next month that lets customers use smart phones to pay for purchases in stores.
The program, to run from September through the end of the year in the New York area, is the biggest step yet by the two companies toward creating a “digital wallet” with a host of financial capabilities built into the latest, most sophisticated mobile phones.
Major U.S. banks, technology companies and cellphone providers are jockeying for the lead in the technology, which some say could become a primary means of making everyday purchases.
Visa also plans to conduct a similar test program with US Bancorp this year, a company spokeswoman said. A US Bancorp spokeswoman confirmed that it would begin its pilot in October.
Mobile payments have been used for years in countries such as Japan, but the U.S. has been much slower to adopt the technology.
“We see this as a critical capability given the increasing acceptance and adoption of bank services on the phone,” said Laurie Readhead, Bank of America’s head of electronic commerce.
The program will allow selected New York-area employees and customers to install small chips, supplied by Visa and its technology vendors, in their smart phones that emit radio signals over very short distances.
Customers would then wave the phones near point-of-sale devices in stores — and their bank account data would be collected and their purchases completed.
Competition is increasing from outside the banking world.
Verizon Wireless, AT&T, T-Mobile USA and Discover Financial Services are working on a joint venture offering mobile payment services, people familiar with the matter said.
Bank of America, which introduced mobile banking in 2007, has more than 5 million customers conducting $15 billion in transactions via their phones — primarily bill payments and account transfers.
The numbers are small compared with the bank’s 29 million online banking customers.
Those services, bank executives said, will expand as sophisticated mobile phones, like Apple Inc.'s iPhone and Research in Motion Ltd.'s BlackBerry, become increasingly common.
In the second quarter, 42% of all consumer handsets sold were smart phones, up from 2% in the second quarter of 2009, according to market research firm NPD Group.