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Will Apple take the Isis bait?

May 19, 2011

Isis is opening its arms to invite Apple, Sprint and Google into its mobile payment network, but whether this would be a good development for mobile payments or not remains to be seen.  

Isis was launched last year as a joint venture of Verizon Wireless, AT&T Mobile and T-Mobile with a focus on building a mobile payment network using smartphone and near field communication (NFC) technology to streamline the payments process for consumers and merchants. Its initial partners were Discover Financial Services and Barclaycard US.

“The initial plans to go to market with Barclaycard and Discover did not work and Isis wants to rethink its strategy,” said Jagdish Rebello, senior director and principal analyst at IHS iSuppli, El Segundo, CA. “It’s not enough for Isis to have one or two players, it needs to build an ecosystem that has all of the big players if NFC and mobile payments are to take off.”

Jaymee Johnson, spokesman for Isis, New York, said in an interview with Mobile Commerce Daily earlier this month that the company has changed an earlier strategy of fewer partners to working with more (see story). However, the focus in the media at the time was on Mastercard and Visa joining Isis.

Then, this week, Isis CEO Mike Abbott told Forbes that Isis would be willing to work with Apple and Google.

Mobile payments still make up a small percentage of overall payments because there are not a lot of phones in the market that are NFC-enabled nor that many merchants that accept mobile payments. Another hurdle has been the variety of mobile payment solutions that are offered.

Bucks stop here
Bringing these brands together behind a single mobile payment network, however, could benefit the mobile payment industry.

“The less confusion there is in the marketplace for consumers, the greater the likelihood that they are going to adopt mobile payments,” said Drew Sievers, cofounder/CEO of mFoundry, Larkspur, CA.

“If the mobile payments space is highly fragmented, the likelihood that consumers will adopt goes down because there is confusion in the marketplace,” he said.

Starbucks’ recent experience with mobile payments provides a good example of the power of simplicity, per Mr. Sievers.

Starbucks began accepting mobile payments in January via the Starbucks Card Mobile and iPhone and BlackBerry applications at more than 6,000 locations. Earlier this month, the company revealed that more than 3 million people have paid using mobile.

“I think the reason the Starbucks program works is because it is simple and provides value,” Mr. Sievers said.

Bringing in brands such as Apple and Google would also benefit Isis.

“Making Isis more flexible and open is going to benefit them and put them in a stronger position going forward,” Mr. Sievers said.

The question is whether Google, Apple or Sprint would be interested in working with Isis.

“I would expect Sprint to take the bait,” said Mr. Rebello. “I expect Google will join as it tries to position itself as an enabler of these technologies.”

Will it bite?
Apple, however is likely to hold out.

“I would be pleasantly surprised if Apple takes the bait,” iSuppli’s Mr. Rebello said.

Not everyone agrees, however, that Isis partnering with these brands could benefit mobile payments.

“I think this will have little impact on mobile payments because I don’t think an Isis-branded payment scheme that required customers to open a new banking relationship with Isis would capture any meaningful volume,” said David Schropfer, partner at The Luciano Group, New York.

“Now we have three formats emerging for the wallet: Isis, Visa’s Wallet and Verifone,” Mr. Schropfer said. “I think all three are similar services, all three will support multiple credit/debit/alternate payment methods, but ultimately only one will win, and consumers are likely to wait to see which wins before adopting mobile payments.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily

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