RIM, Carriers Fight Over Digital Wallet

BlackBerry maker Research In Motion Ltd. is locking horns with wireless carriers over control of mobile-payment data, in an example of the battles erupting as smartphones evolve into electronic wallets.

The dispute centers on where key data related to mobile payments will reside on the next generation of smartphones, slated to come out later this year. Now, such information is stored in the magnetic strip on a credit or debit card. RIM and other handset makers are poised to make phones that will store this data, known in industry parlance as "credentials," in the devices themselves. In a transaction, the customer would wave the phone near a special electronic reader at a store's checkout. But RIM and carriers like Rogers Communications Inc. in Canada, and AT&T Inc. and T-Mobile USA in the U.S., disagree over exactly where on the phone the credentials should reside—and thus who will control the customers, revenue and applications that grow out of mobile payments. The carriers say they want to encrypt and store the credentials in the phone's SIM card, the small chips placed in the back of phones to activate access to mobile networks. SIM cards can be easily swapped from phone to phone. Such a system provides a single payment hub that doesn't depend on what kind of phone you have, the carriers argue. RIM wants the credentials built into a secure area of the BlackBerry itself, which would bind users to its devices and potentially cut carriers out of the loop, according to officials representing some of the carriers. RIM is already reaching out to banks on its own, these people say.