Thursday, November 14, 2013
The near field communication (NFC) -based mobile wallet venture Isis launched its service nationwide today. The mobile wallet application is available as a free download from the Google Play Store. The app, which comes in three versions that coincide with the three largest U.S. mobile telecommunication networks behind the venture, is garnering mixed reviews from users on its first day of national availability. But payments insiders remain optimistic about the future of the mobile wallet enterprise.
Isis was created by JVL Ventures LLC – a collaboration between AT&T Mobility LLC, T-Mobile USA Inc. and Verizon Wireless. Isis had been in pilot mode in Austin, Texas, and Salt Lake City since October 2012.
As of July 2013, Isis payments were being accepted in over 4,000 merchant locations in the two pilot cities, with the average Isis user making 10 contactless payments per month. The mobile app relies on merchants having POS devices that accept contactless NFC payments. Aéropostale Inc., The Coca-Cola Co., Foot Locker Inc., Jamba Juice and Macy's Inc. are Isis' national merchant partners to date.
Isis' proprietary SmartTap NFC technology must be integrated into POS devices to enable the proximity payments solution. POS devices manufactured by Equinox, Ingenico and VeriFone, among others, support SmartTap, with Isis recently adding several new POS manufacturers to the list, including PAX Technology and On Track Innovations Global.
At last count, the Isis wallet can be used with 35 mobile device models equipped to initiate NFC transactions. However, as pointed out by Isis users in reviews of the product on Google Play, the limited number of payment cards that can be linked to Isis as the funding source is proving problematic.
Credit cards issued by the retail banking arm of JPMorgan Chase & Co. can be linked to the Isis wallet. The American Express Serve prepaid card can also be used with Isis. Users who posted reviews of Isis remarked that restricting cards to only those two issuers dampened their enthusiasm for the product. Users pointed out that Google Inc.'s mobile wallet app allows linking to any branded bankcard.
The three mobile carriers apparently block its subscribers from using Google Wallet as well. Additionally, Isis users must purchase a special SIM card from mobile carriers to operate Isis on their devices. Overall, the T-Mobile app faired best in Google Play reviews, with an average of three stars out of five.
If the Isis launch has been somewhat rocky with consumers, payments industry experts on mobile payments are optimistic about the initiative. "I believe Isis will succeed where other mobile wallets have not and will set the standard for how NFC is used in mobile devices," said Randy Vanderhoof, Executive Director of the Smart Card Alliance.
Payments consultant Todd Ablowitz is equally positive about the rollout. "It's encouraging to see the national launch of a mobile payments system of this magnitude," he said. "The fact that Isis is following through with a nationwide launch that commands an investment of store resources, staff training and powerhouse marketing definitely signals a commitment to this product and to the opportunity it presents."
Thomas Niedbalski, Senior Vice President, Business Development at virtual gift card network operator Transaction Wireless, seconded that opinion. Niedbalski, who is attending the Isis launch festivities this weekend in Austin, praised the mobile telecoms for bringing their substantial resources to bear on the mobile wallet.
Unlike Apple Inc.'s Passbook, as well as the search giant's Google Wallet, the carriers have made Isis "their primary initiative, not a secondary initiative like it is for Apple and Google," Niedbalski said.
Ablowitz cautioned that Isis has serious obstacles to overcome. "Isis still has a long way to go to see if consumers will buy into the idea of a mobile wallet," he said. Additionally, the mobile venture must confront the iPhone dilemma, since the popular Apple device does not support Isis. "[T]he lack of iPhone support strikes me as a serious obstacle to overcome," he noted. "Therefore, watching how that plays out with [Apple] consumers will tell us a great deal."
But Ablowitz sees the backing of Isis by the mobile carriers as "significant and very important" because of their influence with smartphone manufacturers, sans Apple. That influence is "critical in getting phones built with the required technology," he said.
Another hurdle for Isis involves merchant acceptance of the solution, which means costly POS terminal upgrades to SmartTap. "You might have 5,000 locations and you might have five point of sale systems within each location," Niedbalski said. "You're looking at 25,000 units that you have to upgrade, which can be very costly."
But this is where the mobile carriers' deep pockets may come into play, as they have the resources to incentivize merchant adoption. "Their ability to be able to subsidize those hardware upgrades to help those brands move in this direction is going to be key," Niedbalski said. "I think that's what's going to make a major difference in their success."
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