Haggling to Make the Cell Phone a Wallet

In Japan and parts of Europe, consumers actively buy with their cell phones, without making a call. So U.S. carriers must be falling over themselves to sell phones with ATM-like capabilities here at home, right? Think again. Mobile phone operators are the ones holding up a new era of wireless money transfers in the United States. The reason: They haven't found a business model they like. Carriers are reluctant to open up their customer databases to banks, whom they consider competitors. Phone carriers want a percentage of each sale from their cell phone. Meanwhile, banks do not want to split their fees with carriers; saying that the business model is not viable since it would jack up purchase prices.

Negotiations between carriers and consumer banks have recently stalled over when - and how much - users must pay when they buy double-shot lattes via their cell phones. When the fees are negotiated, it is anticipated that the U.S. will follow Japan and Europe. Analysts say this method of payment is a "cash cow waiting to be drained." [via Business 2.0] Enter Cingular to pioneer a mobile payment pass system in New York City.

Cingular is collaborating with Citigroup on a mobile payment system in the Big Apple. Like its Atlanta trial last year, the New York program involves Nokia handsets fitted with NFC (near-field communication) guts. Cingular will use Citi Mastercard, giving users the ability to use their phone for payment anywhere Mastercard's PayPass system is accepted. Parties involved expect the trial to last a total of three to six months, at which point we should all have a better perspective on how folks feel about shedding cash by tapping their cellphones against various surfaces. Of course, Japan seems to like it just fine -- so why not us? [via engadget]