July 31, 2012

Much heralded upon its announcement in November 2010, the mobile payments platform Isis is gearing up for its initial rollout with a pragmatic outlook. Formed by AT&T Mobility, T-Mobile USA and Verizon Wireless, the mobile wallet venture will use near-field communication (NFC) technology to allow customers to make point-of-sale purchases by waving their smartphones over scanners. The service is scheduled to launch later this summer on a limited basis in Salt Lake City and Austin, Texas.


8 Players Shaping the Future of PaymentsThere never has been more innovation -- and uncertainty -- in the payments space than there is today. But while banks continue to provide much of the infrastructure required to process and support payments, it often seems as if most of the innovation around payments that is capturing the hearts and minds of customers is coming from non-bank players. Bank Systems & Technology's August digital issue peers into the future of payments, identifying the opportunities and threats for banks in the increasingly electronic and mobile market.

The consortium has forged partnerships with Visa, MasterCard, Discover and American Express and has reached agreements with Chase, Capital One and Barclaycard to include their credit, debit and prepaid cards in the Isis mobile wallet. Isis previously announced the selection of digital security firm Gemalto (Amsterdam) to secure its mobile commerce platform as it gears up for its rollout.

[Balancing Customer Choice, Cost and Risk in Payments.] According to Ryan Hughes, chief marketing officer for Isis, the consortium will take its time and gauge the marketplace after its initial launch rather than immediately expand the rollout nationwide. "We're not marching toward any particular hard dates," he relates. "Our focus is on getting it right." Hughes adds that Isis specifically chose Salt Lake City and Austin as its initial markets because both have high concentrations of early tech adopters. According to Hughes, the number of merchants in those two cities that will be equipped to accept Isis payments upon its release will number "in the thousands."

Sizing Up the Competition

Although there are a number of mobile wallet products currently in the market, or that have been announced, Hughes doesn't see them as direct competitors to Isis; rather, he says, consumers' long-held payment habits are the mobile wallet's biggest competition. "Our competition is the leather wallet and the physical cards in that wallet," Hughes insists. "We want consumers to be conditioned to pick up their mobile phones to make a purchase."

In many ways, notes Hughes, the proliferation of mobile payments products actually bodes well for Isis and mobile wallets in general. "Mobile has created the next frontier of innovation," he says. "There are a lot of companies doing interesting things. All of this is causing merchants to think about how they engage with their customers."

But Aaron McPherson, practice director with IDC Financial Insights (Framingham, Mass.), points out that NFC-based payments may not end up being the dominant mobile payments vehicle. He says cloud-based wallets, for example, don't require a merchant to install a special NFC terminal, and they can "evolve with the technology," whereas upgrades are more difficult with a hardware-based wallet. "NFC is out there, but you can't say at this point that it will be 'the' solution or that it won't be superceded by something else," McPherson comments.

Isis's Hughes, however, says NFC "is in a superior position" compared to other mobile payments technologies due to its reliability and security. The security infrastructure in an NFC-based wallet, he adds, is a motivating factor for issuing banks as they determine the mobile wallets with which they will partner and that will store cardholder credentials.

IDC's McPherson acknowledges that Isis has several strengths, most notably that it is a partnership among telecom companies. Other mobile wallets, such as Google Wallet, still need to secure the cooperation of mobile carriers.

Hughes adds that one of Isis's priorities is to work with banks. In addition to the agreements with Chase, Capital One and Barclaycard, Isis is actively working with most of the big banks and has received a "strong response," Hughes says. "We want to give consumers the greatest utility in terms of the cards they can put in their mobile wallet," he notes.

ABOUT THE AUTHOR
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as ...