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Rebounding after abandoning plans to build a proprietary merchant network, the Isis mobile-payments joint venture of three leading telecommunications companies on Tuesday said it had enlisted the support of the four major general-purpose card networks in the U.S. The announcement marks an advance by the venture backed by AT&T, Verizon Wireless, and T-Mobile to build an open mobile-payments platform using near-field communication (NFC) technology.
“We would say that it’s a first step, but a big first step,” Jaymee Johnson, who heads marketing at New York City-based Isis, tells Digital Transactions News.
The deal does not materially change Isis’s potential reach with merchants because the venture’s original general-purpose card-network partner, Discover Financial Services, now has virtual parity with Visa Inc. and MasterCard Inc. in acceptance thanks to its partnerships with about 100 U.S. merchant acquirers, notes mobile-payments consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC. But it could give Isis a big lift on the issuing side because card issuers that want to enable their cardholders to migrate their accounts to Isis’s mobile wallet can now do that more easily with all of the card brands as partners. A MasterCard-leaning issuer wouldn’t need to rebrand or reissue accounts as Visa accounts if MasterCard hadn’t joined but Visa had, for example.
“The ability of issuers to join, regardless of their preferred network, is cemented,” says Ablowitz.
Johnson confirms that Isis recruiting issuers, but he won’t give details. “It is true that we are actively working with issuers, a good number of issuers,” he says. “We will have announcements … coming soon.” Isis’s only announced issuer partner so far is the U.S. arm of Britain’s Barclays Bank.
The carriers envision their customers with smart phones using Isis to shop at Isis-accepting merchants and getting notices of deals or coupons on their devices, and then tapping their phones on an NFC-accepting terminal to pay.
Isis did not give further details about how it might work with the networks, though Johnson says the agreements are substantive. “These are real contractual relationships, they’re not handshakes or back slaps,” he says. A news release announcing the deal quoted the chief executives of Visa, MasterCard, and Discover as well as a senior American Express Co. executive praising Isis’s open approach to mobile payments and its enabling them to expand their options for cardholders.
But Isis and other mobile-payments players using NFC, such as Google Inc., have a long way to go before their plans come to fruition. Only about 150,000 U.S. merchants accept contactless payments, and the Samsung Nexus S currently is the only NFC-enabled smart phone in the U.S. market. Still, Tuesday’s announcement enabled Isis to score some points after abandoning plans for a proprietary network and then seeing Google, with its Google Wallet and Google Offers services, and others capture headlines over the spring and early summer with their mobile-payments announcements. Google’s service for the time being is limited to one network, MasterCard.
“They had to get something that publicly showed how serious and active and driven they are,” says Ablowitz. “This is a p.r. coup for them.”
Isis plans to roll out its system next year in Salt Lake City, Utah, and Austin, Texas. Its first announced merchant is the Utah Transit Authority, which accepts contactless general-purpose cards for fare payments.
In related news, AmEx announced Monday that Sprint Nextel Corp. has become the first telecommunications network to promote AmEx’s Serve mobile-payments service. Sprint customers who register for a Serve account and use smart phones with Google’s Android platform later this summer will be will be able to access Serve’s mobile wallet through the Sprint Zone, an application for connecting to Sprint services and other apps.
