Deutsche Telekom Teams Up With Mastercard for Mobile Payments

Deutsche Telekom AG teamed up with Mastercard Inc. to enable consumers to pay with mobile handsets as Europe’s second-largest phone company seeks to use its network for new services.

In a first step, the Bonn-based operator will offer payment cards in Germany this year that come with a so-called near-field communication chip, allowing transactions by moving it close to a cash register, Deutsche Telekom said in a statement today. The company will later integrate the NFC technology into mobile-phone SIM cards.

Deutsche Telekom plans to almost double revenue areas such as mobile data, online services and machine-to-machine communication to 29 billion euros ($36.7 billion) by 2015. The former German phone monopoly and other wireless operators such as Vodafone Group Plc are starting their own mobile-payment offerings to take on Google Inc. and its mobile-wallet software for NFC-enabled phones.

“Our aim is to build a complete ecosystem around paying with smartphones,” said Thomas Kiessling, Deutsche Telekom’s chief innovation officer.

Deutsche Telekom said its mobile-wallet product will allow clients to buy train tickets, cash in rebates and participate in customer loyalty programs when a specific product is purchases several times. An offering to use other payment cards or systems will be started in Poland this year, with a German release planned for next year.

Missing Out

One in five new smartphones will be NFC-enabled by 2014, which amounts to about 300 million units, according to estimates by Juniper Research. Phone companies will introduce the service in 20 countries before the end of the year, mostly in western Europe and North America, the researcher has said.

Europe has missed out on the “most promising” mobile-phone payment initiatives because the region lacks a regulatory framework for the technology, European Union regulators have said, citing initiatives by Visa Inc., Google and Apple Inc.

Visa last year agreed to license its mobile-payment technology to Google to be incorporated into the design of a new smartphone.

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