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Macy’s, Foot Locker expand mobile payment efforts via Isis partnershipBy
A pilot of the Isis mobile wallet is scheduled to kick off this summer in Austin, TX, and Salt Lake City, UT. While the locations for the pilot and partners on the handset and financial services sides have been known for some time, this is the first indication of which retailers will allow shoppers to pay for purchases via the Isis wallet.
“There has been all this news about partnerships with hardware vendors and credit cards, but if you don’t talk about merchants and consumers, it is not going to happen,” said Nick Holland, senior analyst at Yankee Group, Boston.
“It is a step in the right direction,” he said. “It shows that they are doing their homework and are getting some traction.
“It is slightly telling that the national merchants are already Google Wallet merchants – this means there are not any sacrifices being made as far as the retailers are concerned.”
Isis did not respond to a request for comment.
Mr. Holland points out that there is a bit of overlap between the retailers which are enabling consumers to pay via both major competing NFC-enabled mobile wallet solutions, Google Wallet and Isis.
Merchants partnering with both include The Coca-Cola Company, Champs, Foot Locker, Jamba Juice and Macy’s.
“It is not a big deal for these merchants to buy into Isis if they already have the right hardware for Google Wallet,” Mr. Holland said.
“Isis is in a handful of places within Austin and Salt Lake City – this points to the challenge with NFC, which is that it is hard to scale,” he said.
In total, Isis announced more than 50 merchants will be accepting mobile payments via the mobile payments app, including both local and national brands.
At the local level, there is a list of restaurants, book stores, entertainment facilities and other merchants in both Austin and Salt Lake City who will be enabling customers to pay via Isis.
Additionally, merchants in both cities who already accept contactless payments will be compatible with Isis. These include numerous grocery stores, gas stations and other merchants.
The mobile payments solution, a joint venture of AT&T Mobility, T-Mobile USA and Verizon Wireless, involves a mobile wallet application that uses near-field communications technology. Users can pay for a purchase, receive offers and redeem loyalty points by tapping their phones at supported POS devices at checkout.
Competition gets tough
When Isis was first announced in late 2010, it made a big splash because it was one of the first entries in the nascent mobile payments space.
Over the past year and a half, mobile payments have begun to take off with companies such as PayPal and Starbucks posting significant mobile transaction volumes.
At the same time, the number of mobile payment entries competing for the consumer’s wallet has grown significantly.
While having retailers on board is important in order for Isis to compete, it may not be enough for it to gain significant traction.
One issue is that consumers still have to have the right handsets that are NFC-enabled and work with the Isis mobile app to be able to tap and pay for their purchases.
Additionally, the proliferation of mobile payments solutions makes entering the space for any additional retailers a challenge because they may not want to invest in technology that is going to be obsolete in a few years.
Having a big merchant such as Starbucks, Walmart or Target to sign on could provide the necessary breakthrough. However, such a development appears unlikely since Starbucks is seeing significant success with its own mobile payments solution while Walmart and Target are reportedly working on their own mobile payments solution.
Key to the success of Isis will be its ability to provide couponing, offers and CRM solutions that make the wallet more than a credit card on a phone and offers a strong value proposition.
Per Mr. Holland, Isis may want to consider using an interim software technology such as QR codes to enable mobile payments while its waits for NFC technology to be more broadly available.
“There are a multitude of competitors that are compelling and have a much lower barrier to entry that Isis,” Mr. Holland said.
“Tying the wallet to NFC is going to be problematic for some and it is not going to change until merchants are forced to upgrade,” he said.
“The value proposition isn’t there yet and there are workarounds that are far cheaper for merchants that aren’t beholden to the credit card companies.”
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