Latest Isis Delay Leaves Open When the Venture Will Finally Launch

With the Isis mobile-payments venture having announced yet another delay, it remains unclear just what is causing the holdup and when the service will launch. And, say observers, time may be growing short for the venture, which is backed by three of the country’s largest wireless carriers. “I don’t know what on earth is causing the delay, but it must be something serious because they’re running out of time,” says Aaron McPherson, director of the financial-services practice at IDC Financial Insights.

Isis said late last week it will miss its expected summer launch date in its two target cities, Austin, Texas, and Salt Lake City. While the news wasn’t entirely unexpected, given that merely a handful of days remain until fall, Isis has left unclear just when it now expects to start operations. Some news outlets have reported a possible October launch, but the venture seems to be holding open the possibility of later timing. In response to inquiries from Digital Transactions News, a spokesman says, “We will be back in touch in October to discuss launch specifics and momentum news.”

Nor is it clear what is causing the delay. The company, formed as a joint venture late in 2010 by AT&T Wireless, T-Mobile USA, and Verizon Wireless, has already let slip at least one earlier launch deadline. Officials spoke in February of a July launch and indicated a possible earlier startup before the venture began referring generically to a “summer” deadline.

The Isis spokesman points to the complexity of the venture, which requires working with the three parent telcos, merchants, issuers, card networks, programmers, and other participants. “Building a mobile commerce solution of scale requires deep collaboration across the ecosystem. This takes time,” he says. “Getting the infrastructure right at this point is critical as it will ensure a positive consumer experience now and position us for partner growth later.”

Some observers agree, and cite reasons for optimism despite the latest holdup. “Lots of compliance checks. Hundreds of lawyers and thousands of edge cases. It was certain they would have slipped despite being code complete,” notes Cherian Abraham, mobile-payments and banking advisor at information-services company Experian, in an e-mail message. “Not to mention that the model is extremely complex. But I'm told that October is looking very good overall. I think they need to put it out on pilot, let it simmer, and ramp up on merchants [as soon as possible].”

So far, four issuers—American Express Co., Barclaycard U.S., Capital One Financial Corp., and JPMorgan Chase & Co.—have agreed to let their cardholders save their cards to the Isis wallet, though Barclaycard will be participating later. As of May, the service had signed about 50 merchants accounting for some 300 locations in each city, and has not released any further merchant announcements. That number, if still valid, remains well short of the 1,000 locations Isis officials had stated as a launch goal in February, though included among accepting merchants are several national chains as well as vending companies and gasoline marketers.

With Isis, which works with three handset models all running on Google Inc.’s Android software, consumers will wave or tap their phones to make payments and redeem or receive rewards. The phones will link to the point of sale via near-field communication (NFC), with payment credentials stored in the phone’s SIM card.

A critical Isis feature, Smart Tap, allows consumers to redeem and receive rewards via the NFC link. While this requires merchants to upgrade their point-of-sale readers, Isis officials have said Smart Tap will also work with less sophisticated technology, such as barcodes or hot-key entry. Still, observers like McPherson caution that the longer Isis remains on the sidelines, the harder it will be to win consumer loyalty as other wallets roll out. Google Wallet, which has been commercially available for a year, offers a similar rewards service called SingleTap, though again relatively few merchants are equipped to make it work.

Google Inc., which had been following an NFC model similar to that of Isis, recently revised its strategy, moving card credentials from a phone-based secure element to cloud servers. Meanwhile, PayPal offers a digital wallet as well and Visa Inc. is expected to introduce its V.me wallet by year’s end. Both products rely on a hybrid phone- and cloud-based approach to NFC. “Time is not on [Isis’s] side as people get used to digital cloud-based wallets” notes McPherson.