Isis Uses ISOs, Subsidized Terminals To Build Merchant Base for Its NFC Wallet

As it rolls out its service in Austin, Texas, and Salt Lake City, the Isis mobile-payments venture is teaming up with independent sales organizations and merchant processors to sign up merchants to accept its mobile wallet. One of those ISOs, Phoenix-based MobiSquad, currently has about 350 merchants in the launch cities set up to accept Isis, says chief executive and founder Nate Reis.

All of those merchants received a free terminal lease from MobiSquad, Reis says, because one of the central tenets of the company’s business model is free terminals. However, MobiSquad also entered into an agreement with Isis under which Isis subsidizes some terminals. Isis did not return repeated phone calls from Digital Transactions News.

To accept Isis, merchants must have a terminal that can handle near-field communication (NFC) transmissions from customers’ smart phones. Most merchants lack these devices, a factor that has hobbled NFC.

“Isis is investing money to ensure their launch is successful, but we’re not relying on that,” Reis says. “MobiSquad’s been subsidizing all the free equipment out there, and we’ll continue to do that. [With] over half of the merchants, we just paid for [the equipment] ourselves.”

The merchants aren’t subject to long-term commitments to get the terminals, Reis says. “Should any time you get sick of us, just call us, we’ll come pick it up,” he says.

Salt Lake City merchant Granite Bakery and Bridal Showcase signed up to accept Isis through its processor, Heartland Payment Systems Inc. of Princeton, N.J., and received a free terminal, according to Amy Gomez, bakery manager. The bakery had to agree to accept Isis payments and return its old terminal to Heartland, but it did not have to make any other commitments to receive the terminal.

Heartland also entered into an agreement with Isis that includes terms on subsidizing free terminals, says Mike English, executive director of product development. Although English could not disclose the number of free terminal leases available, he could say that Isis is covering at least some of the costs associated with the leases.

Heartland is attracting a fair share of merchants to Isis, English says. “I can’t share any information on the number of merchants, but we’ve been told by Isis that about 30% of the small and medium-size businesses participating in the program are Heartland merchants,” he says. About 60% of those merchants are new to Heartland, English says. Both existing and new merchants qualified for a free terminal lease from Heartland.

Heartland began processing Isis transactions fairly quickly after the October launch, English says, though he could not provide specific transaction numbers. “But there’s a volume there. When you look at other wallet pilots that have happened in the U.S. this past year, the Isis numbers are fairly impressive.”

Both Heartland and MobiSquad have received positive merchant and consumer feedback about the ease of using the system. “The biggest thing I can say is that people are blown away,” says Reis. “The transactions are really smooth.” Isis is a joint venture of leading U.S. mobile carriers AT&T Mobility, T-Mobile USA, and Verizon Wireless.