Isis, the mobile payments joint venture from AT&T, Verizon and T-Mobile, will work with four major credit card providers to power a mobile wallet. The partnerships with Visa, MasterCard, American Express and Discover come as no surprise after Isis, initially billed as a payments service to rival the card providers, announced it was downgrading its offering to focus purely on offering a mobile wallet to enable consumers to make payments from a number of their existing cards via their mobile phone.
The deal means that customers with any of the four card companies will be able to pay for physical items using a phone equipped with near field communication (NFC) technology. An NFC-powered device will store card details on the phone, which can then communicate with a retailer's NFC-enabled payment terminal to enable a consumer to make purchases. Isis will launch initially in the US in the first half of 2012, with Salt Lake City, Utah and Texas as the first locations to trial the service and further locations to follow shortly afterwards. Commenting on the developments, the four card companies say an "open approach" is vital if mobile payments are to come to the mass market.
“We have been committed to building a mobile commerce platform that aligns and advances the interests of consumers, merchants and banks,” says Isis CEO Michael Abbott. “By working with the nation’s payment networks – Visa, MasterCard, Discover and American Express – we significantly advance the vision of an open and secure platform that provides banks and merchants with a new and highly relevant way to connect with consumers.”
The payments venture comes as US carriers try to defend their relationships with consumers, as tech firms such as Apple and Google seek direct ties to subscribers, says eMarketer analyst Noah Elkin.
"The operators are anxious to find ways to regain relevancy with (and derive additional revenues from) their subscriber base, and they see payments – an emerging area whose time may finally be coming – as a way to do that," he says.
On its launch, Isis will go head to head with similar NFC payment services from US mobile operator Sprint, and Google, which has already launched its Wallet service. However, Isis has an immediate advantage over its rivals, which have so far only signed up MasterCard as a partner, giving Isis more reach in terms of consumers and merchants. Nonetheless, Elkin says that merchant adoption of NFC may itself pose a challenge.
"More partnerships with payment processors lend Isis the upper hand for now relative to Google Wallet, which so far only counts MasterCard as a partner," he says "But both Isis and Google Wallet face a similar uphill battle in getting merchants to adopt NFC technology at the point-of-sale and the scarcity – for now, at least – of NFC-equipped handsets."
The industry will watch the progress of competing payments services in the US with interest, as a combination of NFC-powered devices and increasing consumer willingness to process payments through their phones create a ready market, for a number of cross-industry players.