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The Isis mobile-wallet consortium said Wednesday it is activating new wallets at the rate of 20,000 per day. That rate, achieved over the last 30 days, represents a doubling of the rate Isis saw in the previous 30-day period, the company said.
The upbeat news from Isis comes as some observers are questioning merchant and consumer interest in mobile wallets. For example, San Francisco-based Square Inc. earlier this week discontinued its 3-year-old Square Wallet in the face of tepid consumer demand, replacing the product with an order-ahead app that works with select restaurants in San Francisco and New York City.
Isis refuses to disclose how many wallets it has activated overall since its national launch six months ago, nor will it say how many of those customers are active users. In year-long tests it ran in Austin, Texas, and Salt Lake City before the launch, Isis ran into generally anemic consumer usage among small merchants.
“Since our launch nationwide last November, consumers across the country are experiencing the power and simplicity of paying with their phone and the response has been tremendous,” says Isis chief executive Michael Abbott in a Wednesday blog post announcing the activation numbers. Abbott also revealed that some 68 mobile devices now support the Isis app, with 14 smart phones coming preloaded with it. “[M]ore preloaded devices [are] in the pipeline,” Abbott’s post says.
Isis is a joint venture of carriers AT&T Mobility, Verizon Wireless, and T-Mobile USA, whose store networks sell the devices and help consumers load and enroll in the app, a factor some observers say has led to the jump in activations. “Isis has a huge distribution channel,” notes Rick Oglesby, senior analyst at Double Diamond Payments Research.
Isis users can load cards issued by American Express Co., JPMorgan Chase & Co., and Wells Fargo & Co. They can also access other cards or a bank account by loading an AmEx Serve account.
Isis and participating merchants have also heavily subsidized consumer usage with promotions and incentives. Jamba Juice, for example, has been running a so-called 1 Million Free Smoothie campaign, in which users earn a free smoothie when they buy one with Isis. The chain had given away more than 270,000 of the concoctions by the end of March and expects to hit the 1 million mark this fall, James D. White, Jamba Juice chief executive, is quoted saying in Abbott’s blog post.
These giveaways and other such incentives have been crucial for Isis’s build-up of awareness and usage, Oglesby says. “Are consumers going to keep using [Isis] when the free smoothies are gone, that’s the big question,” he says. And not just consumers may be affected. Equally important for Isis, as for all wallet ventures, is merchant acceptance, Oglesby points out. Some merchants may lose interest in Isis as their promotions expire and users fall away, he says.
An Isis spokesman argues consumers aren’t likely to stop using Isis at stores that run usage campaigns once those campaigns run their course. “As consumers use [Isis] more and more, they’ll get used to it, they’ll continue to use it,” he tells Digital Transactions News.
Isis relies on near-field communication, a contactless protocol that establishes a radio-wave link between the consumer’s mobile device and the point-of-sale terminal. As a result, a positive for Isis is that the expected U.S. rollout of chip cards on the Europay-MasterCard-Visa (EMV) standard will lead to the installation of merchant terminals that will come equipped for NFC transactions. “We’ll see a lot more capability out there” for Isis, Oglesby observes.
In the end, Isis’s biggest challenge is simply to overcome consumers’ attachment to traditional payments, Jaymee Johnson, Isis’s head of marketing, told Digital Transactions magazine for a story on host card emulation in the upcoming June issue. “Our biggest competitive threat is not the horse race among [wallet] competitors,” Johnson told the magazine. “Our biggest competitive threat at Isis is still the consumer’s leather wallet, it’s changing consumer behavior.”
