Credit Card Companies: Who’s Doing What in Mobile Payments?

Visa is making a strategic investment in mobile payment provider Square, providing the start-up with an undisclosed sum of money as well as a new advisory board member. It’s a nice boost for Square, which is on a roll as it tries to ramp up payments via a smartphone. But it also highlights the growing role of credit card companies as they try to prepare for the growing mobile payments boom. As more and more transactions flow through a mobile phone, Visa, Mastercard and American Express have been making moves to position themselves in different ways to take advantage of this trend. It’s not just a passing interest for these companies. In many ways, they need to be actively involved in the rise of mobile payments, which can threaten to cut them and their cards out of the process. Here’s a look at what some of the biggest players are doing in the field:

• Mastercard: Mastercard has been an early believer in near field communication and has been working on contactless payments all the way back to 2002 with its PayPass system. It now has 88 million PayPass cards and devices in use at 276,000 merchant locations. And it’s rolling out worldwide deployments of near field communication, a short-range wireless technology that is being used for contactless payments. Mastercard is also working with Gemalto, which will include Mastercard’s PayPass authentication and credentials in Gemalto’s SIM cards. When paired with an NFC-enabled phone, it will mean easier use of PayPass NFC transactions.
• Visa: Visa is also working on the NFC front and is working as well on microSD solutions with banks. Visa also announced it was teaming with Samsung to bring NFC payments to the Olympics in London next year. The company is also looking to take on Paypal with its own personal payments system that builds off its VisaNet global payments network. The move takes Visa beyond its traditional strength of point of sales and into the world of electronic payments. With the investment in Square, Visa is also showing that it’s looking to tap mobile card readers to help grow the number of merchants who can tap into its global payment network.
• American Express: AmEx recently threw its hat into the personal payments ring with Serve, a new payment network that allows people to pay each other online, through mobile phones and through American Express’ merchant locations. Funds can be added to Serve accounts from a variety of sources including debit cards, bank accounts and credits cards including American Express rivals. Users can manage their accounts and make payments through a smartphone app or using a prepaid card linked to Serve, which is good at all American Express locations. Serve also plans on delivering marketing offers to users, which could be a lucrative business for payment processors.