Why a Florist in Austin Could Portend a Rosy Outlook for Isis

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The Isis mobile-payment system under development by three big wireless carriers has only one officially announced merchant so far, the Utah Transit Authority in Salt Lake City. But the comments of a small business enthused about the Isis concept indicate the potential for mobile payments despite the very immature market for the near-field communication (NFC) brand of mobile payments espoused by Isis and Google Inc.

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Mike Martinez, co-owner of Ben White Florist Inc. in Austin, Texas, says the lack of NFC-enabled smart phones in the U.S. is not an issue for him. He notes the rapid technological evolution of smart phones and the frequent upgrade cycles of consumers. “It will take some time, but there was a time when cell phones didn’t have cameras, now they all do,” Martinez tells Digital Transactions News. “I don’t really see that as a problem.”

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Ben White Florist is a single-location, family-owned business that does about 70% of its sales on credit and debit cards. Martinez says the company does not have a contactless card terminal, which would enable it to accept NFC-enabled mobile phones for payments, but that might change as part of a planned upgrade of his point-of-sale software. Martinez is considering a new system from a vendor, and choosing it “means that probably all of our hardware will have to be upgraded.”

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Getting such a terminal is a big decision for a small business because, depending on features, it could cost more than $200. The payment card networks seeded the contactless market in recent years by subsidizing the cost of such terminals, especially for small-ticket, high-throughput merchants. But those subsidies have largely ended, leaving the U.S. with an estimated 150,000 contactless terminals. “I’d rather have someone give me one for free,” says Martinez. But he adds that he’s at least considering paying for a contactless terminal in light of the shop’s systems upgrade.

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Martinez says he’s highly interested in the Isis mobile-payment system backed by AT&T Mobility, Verizon Wireless, and T-Mobile. Isis last week announced that Austin would be its second rollout market after Salt Lake, with payments to start in 2012. Part of Martinez’s interest is personal, as he knows the head of Isis’s local office through his dealings with the Austin Chamber of Commerce. Beyond that, mobile payments have advantages over current payment systems for florists, and they’re also a way for businesses to connect with younger customers, he says.

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With the rise of Internet options, including the ability to track down out-of-town florists easily, fewer and fewer customers are using the traditional flowers-by-wire system in which they go the local florist and have their orders wired to a shop in the recipient’s town, he explains. “People that use flowers by wire, people that go and physically do that, are declining,” Martinez says. “They’re doing it on their own.”

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Martinez says his current processing system, however, “is basically pre-Internet” and has outmoded software, with various parties along the transaction route each taking a cut. “The consumer loses,” he says. With Isis, he says, he could potentially streamline the transaction process and take advantage of the company’s highly customizable loyalty program. He says older loyalty systems such keypunch cards to track customer visits are subject to fraud, and “I don’t see the value” in some of the newer systems such as Groupon or Living Social. Those systems offer online daily deals that require merchants to fund steep discounts in hopes of building repeat business.

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Mobile payments could be a hit with both customers and employees in floral payments since both groups like to be able to do more things with the smart phone, says Martinez. “Austin is a very technology-based city, they want to use it and they’re not afraid to use it,” he says. “Austin is ripe for this kind of technology.”

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Ben White Florist is an example of a merchant that might indeed boost Isis’s fortunes as the joint venture seeks headway in an increasingly competitive market. Jaymee Johnson, head of marketing at New York City-based Isis, tells Digital Transactions News by e-mail that, “We’ve received a very warm and welcoming reception in Austin. We’ll be making merchant announcements in the near future.”

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Isis is focusing on its mobile wallet and letting partners such as merchant acquirers add most acceptance locations rather than building a network itself as it originally planned. The announcement about Austin “is one of the first tangible signs that they are accelerating their move in one way or another,” says mobile-payments consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.

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Still, Isis must deal with powerful rivals, including Google, which announced an NFC-based marketing and payments system last month, as well as specialty players, the big payment networks and PayPal Inc. PayPal last week doubled its 2011 mobile-payments volume projection to $3 billion.