The bad news: there presently is no seat for you on the Isis train which just left the station, as the pioneering Near Field Communication tap-and-pay mobile payments wallet has announced a national rollout with no credit union involvement.
The broader news: suddenly, amid rising skepticism about the near-term potential for a mobile phone-based digital wallet, a product will be widely available and could potentially be on the phones of millions of consumers within a very few weeks. “There already are around 20 million NFC phones in the U.S.,” said Jamie Johnson, director of marketing for Isis.
Jointly owned by mobile carriers Verizon, AT&T and T-Mobile, the Isis mobile wallet will work on “over 40 mobile phone models,” said Johnson.
He added that there are several hundred thousand merchant locations already equipped to handle contactless payments, including NFC, and included are well-known brands such as McDonald’s and Whole Foods. Expectations are that as merchants install EMV-compliant terminals, there will be a simultaneous expansion of the numbers of locations able to handle NFC.
Add the number of NFC phones with increasing number of retailers that will accept NFC and that augurs well for Isis, suggested Johnson.
Important, too, said Johnson, is that the large retail apparatuses of the three wireless carriers involved in Isis will now engage in promoting Isis. The implication is that if a consumer walks into a Verizon store today and walks out with a new phone, a clerk will at least have tried to sell that consumer on Isis and may actually have helped the consumer download and set up the app. Ditto for AT&T and T-Mobile.
As for what financial products will interact with Isis, Johnson said that credit cards from Chase and American Express presently do. He added, “We are in talks with other institutions and more will be added.”
There is no indication that Isis plans to pursue smaller financial institutions, such as most credit unions.
That may not represent as much of a snub as you may fear. Barclays and Capital One both participated in the Isis trials but neither is involved in the nationwide Isis launch. Neither has elaborated on why they removed themselves. But their departure has darkened the outlook for Isis, according to many observers.
Even so, Randy Vanderhoof, executive director of the Smart Card Alliance, indicated that he did not believe the three carriers – accomplished retailers – would have committed their stores to this effort if they did not believe Isis is a product consumers will want.
As for what the Isis rollout means, Peter Olynick, who focuses on digital wallets for Carlisle & Gallagher Consulting Group, said, “This will increase awareness for all the mobile wallets as people start to realize the situations where using a mobile might be more convenient than their current methods.”
Paul Fiore, CEO of CU Wallet, agreed: “Any announcement about more availability of digital wallets will be good for all of us.”
He expressed some skepticism about Isis’ viability – its origin, he said, dates back to an era where carriers had nearly complete control over the apps that showed up on phones on their networks. Now those decisions are made by consumers along with Apple and Google, which operate the two biggest apps storefronts, and the carrier clout has receded enormously.
Exactly how and where the carriers can succeed in inserting themselves into the mobile commerce equation is unclear, suggested Fiore.
That skepticism only deepens with Chris Gardner, a founder of Paydiant, an Isis competitor (Paydiant has created a mobile wallet that both FIS and CU Wallet use). He said, “The problem is that the banks are running for the hills from Isis. Their pricing model makes it more expensive than issuing plastic cards.”
In an interview, Isis’ Johnson insisted that Isis does not want a slice of the interchange fee on electronic transactions. He said that Isis makes its money by charging participating credit cards a fee – he declined to offer specifics on amounts – for creating a secure channel for handling transactions.
Another revenue producer will be offering participating merchants a channel for distributing targeted offers to consumers. “We will make money from both sides of the transaction,” said Johnson.
One interesting difference with Isis is that, according to Johnson, Isis will have no visibility into the details of particular transactions. Access to and ownership of that data has emerged as a flashpoint with Google Wallet and PayPal, on one side, and financial institutions on the other, but, said Johnson, it is a non-issue with Isis.
The data, he said, will belong to the merchant and the card issuer and that will be that.
Either way, don’t expect a stampede into NFC use at point of sale. The optimism around NFC-fueled mobile payments that abounded a year or two ago has been replaced with a more temperate outlook.
“NFC is years away from ubiquity,” said Vanderhoof. “This is not happening overnight.”