The news of the day in payments is certainly that Verizon Wireless, AT&T Inc. and T-Mobile USA are participating in a venture, dubbed Isis, that will compete with credit card companies by using near-field communications (NFC) technology to allow for point-of-purchase payments with the wave of a phone in front of a scanner. Most of the coverage so far presents Isis as a key turning point for mobile payments, and indeed it might be.
Here are some prevailing opinions, and question marks, surrounding Isis:
There is already competition for Isis …
A number of hardware and software makers, including eBay Inc.’s PayPal, are rolling out new technologies that will enable people to tap or swipe their phones at a point-of-sale device which can deduct payments from those customers’ accounts. … The telcom joint venture comes as major credit card companies such as Visa Inc. and MasterCard Inc. are pushing their own mobile payment initiatives. In July, American Express Co. hired Dan Schulman, who was the architect of Sprint Nextel Corp.’s prepaid wireless strategy. The divergent paths underscore the tension over who controls the mobile payment network, how the revenue is divided, and which party shoulders the financial and legal burdens.–The Wall Street Journal
The long rollout period does not bode well for Isis …
On the face of it, it looks like the carrier support should add more momentum behind NFC, which also got a boost Monday when Google CEO Eric Schmidt said Android 2.3, the upcoming OS release, will include support for NFC. But just having the carriers on board doesn’t guarantee success for Isis or NFC in general. Isis is working with fourth-place Discover (the Isis venture will use Discover Financial Services’ payment network), which is far behind leaders Visa and Mastercard. And it’s signed up Barclaycard, which is not well known in the U.S. as a credit card issuer. Combined with a vague 18-month rollout and it raises questions about how effective the carriers’ efforts will be. –GigaOM
Will NFC really gain full adoption? …
Verizon and AT&T have also have already rolled out their own carrier billing systems through BilltoMobile and other payment platforms like Zong and Boku. And while that can be used to pay for digital goods, it can also work for physical items, which may undercut the need for an NFC solution and could cause confusion for consumers as to which payment method they should use for what. Meanwhile, there are a lot of challengers looking to get their slice of the pie. Mastercard is one of the early leaders in NFC with 80 million NFC chips in use, mostly embedded in credit cards and 265,000 payment locations. … The merchants have to sign on, which is not a guarantee. First they have to see the audience but they also have to contend with adding a new point of sale terminalS, which cost about $200. –GigaOM
There remain some technical questions about Isis …
It wasn’t immediately known what form factor ISIS would enable payments with. There are a variety of options, including stickers and microSD cards as well as handsets, but there are limited handsets in circulation.–NFCNews