New US smartphone payment system rumored

According to a report from Bloomberg, AT&T, Verizon and T-Mobile - the companies that will soon introduce the smartphone payment system tentatively called “Mercury” - have chosen at least three US cities to test run their new program. Minneapolis, Salt Lake City and Austin, are said to have been chosen according to the report said. The program should begin its initial testing phase around the middle of 2011.

The Mercury program is designed to cut into the profits enjoyed by major credit card providers, the report said. In particular, it targets Visa and MasterCard, the largest credit networks in the world. Together, those two companies alone handled 82 percent of all U.S. card transactions last year, a total of $2.45 trillion.

The system works when a consumer implants an RFID chip with their payment information into their smartphone, allowing them to simply wave their handset in front of a wireless sensor to make a purchase.