With Isis Finally Launching Its Two-City Pilot, Consumers Get a Chance To Decide Its Fate

It looks like it’s finally going to happen. The much-anticipated, much- delayed Isis mobile-payment venture backed by three big telecommunications companies is scheduled to go live on Monday in its test cities of Austin, Texas, and Salt Lake City. Now the ultimate consumers of the new system, mobile-phone users, will get a chance to determine how far it will go in competing with a raft of rivals.

Formed in 2010 by AT&T Inc., Verizon Wireless, and T-Mobile USA, Isis had talked about launching in July 2012, which then became “this summer.” Summer came and went with no launch. The company then indicated things might get under way in September, but that didn’t happen. Now Isis is confirming that Oct. 22 is its start date.

The Isis mobile wallet will use near-field communication (NFC) technology to not only process payments, but also to enable its merchants to offer electronic coupons and loyalty services through its SmartTap feature. Only a handful of NFC-enabled mobile phones are in the U.S. market today, but Isis has said it expects to be enabled on 20 models by year’s end. Those phones are expected to be devices running Google Inc.’s Android operating system. Isis won’t be enabled for Apple Inc.’s iPhone, but the company is expected to provide a sleeve for the popular device that will enable iPhone users to pay with Isis, according to mobile-payments consultant Todd Ablowitz of Centennial, Colo.-based Double Diamond Group.

It’s unknown how many merchants will accept Isis. Isis did not respond to a Digital Transactions News request for comment. Early this year, the company said it wanted 1,000 acceptance locations in each city. As of May, it had about 50 merchants representing 300 locations in each locale. Major retailers such as McDonald’s, 7-Eleven, Home Depot, Jamba Juice, and others have said they plan to accept Isis payments, according to press reports, but it’s not yet known how many of their locations will be live with Isis in the test cities.

Vending machines could end up being Isis’s most common acceptance point. Isis and vending-machine payment network operator USA Technologies Inc. struck an agreement last month to enable up to 7,500 machines in the two pilot cities.

Consumers will be able to pay using Visa, MasterCard, American Express, and Discover cards registered in their mobile wallets. At least four issuers—American Express Co., Barclaycard U.S., Capital One Financial Corp., and JPMorgan Chase & Co.–have signed on with Isis to date.

Now Isis will have to prove to consumers it’s a viable way to pay, according to Ablowitz. “The big story here is going to be how much consumers like it,” he says. “If consumers like it, it’s going to be really exciting.”

Consumers have already proven they like other mobile-payments systems. PayPal Inc. is projecting $10 billion in mobile volume this year versus $4 billion in 2011, and Starbucks Inc. is generating millions of transactions on its closed-loop mobile-payments app. Neither PayPal nor Starbucks uses NFC technology. Another heavyweight in mobile payments, Google Inc. with its Google Wallet, does use NFC, though it’s encountered its share of problems gaining traction.

The travails of Isis and Google may be traced, at least in part, to what Ablowitz calls NFC’s “ecosystem problem where they have too many players fighting over who’s making what money.” With Isis, for example, the secure element for the NFC wallet credentials is the mobile phone’s SIM card, which the carriers control. Banks in general have been leery of this setup, preferring a secure element other than the SIM card.

NFC technology itself, however, is well-suited for mobile payments, Ablowitz adds. “The positive thing about NFC is it’s the best way to conduct a face-to-face transaction, it’s fast, it’s safe, and reliable.”