Isis has not made much of a splash since its announcement last November. The one piece of news out from Isis is a beta trial in Salt Lake City for transit payments. Now the Wall Street Journal reports that Isis may have scraped plans to build its own network and is looking to fold into existing payment networks from VISA and Mastercard.
From the WSJ article:
“The venture known as Isis, formed by AT&T Inc., Verizon Wireless and T-Mobile USA, initially aspired to set up its own payments network and collect fees on every transaction. Customers would maintain accounts directly with their wireless carrier, rather than with a credit card company.
Now, the group has adopted the less ambitious goal of setting up a “mobile wallet” that can store and exchange the account information on a users’ existing Visa, MasterCard or other card, people familiar with the matter said. The carriers are scrambling to find other ways to make money from the transactions.
When Verizon Wireless, AT&T and T-Mobile announced their Isis joint venture last November, they touted it as a new “mobile commerce network” and chose Discover Financial Services Inc. to provide the venture’s payment network. But many merchants were cool to the idea, since Discover is a small player that lacks the reach of Visa and MasterCard, said one person familiar with the situation.
A spokesman for Isis said Discover remains the venture’s partner, but said it was open to new alliances. He declined to comment on future partnerships.”
Same take from The Register: “The scaled-back plan will see Isis verifying payment applications from Visa, Mastercard and anyone else rather than creating anything new. That removes the need for an internationally recognized logo, but also takes away the revenue stream that was supposed to pay for the NFC handsets that everyone is being told they want.”
From Gigaom: “The battle is turning to who can own the customer, their personal data and their payment credentials. Google and RIM would like to store credentials right on the phone, many of which will get NFC chips. But the operators are hoping to be in the loop by getting the secure information on a SIM card. Potential challengers like Apple could also connect NFC chips to its iTunes system for payments. Whatever happens, it’s critical to be part of that direct relationship with the consumer, not just to take a cut of the transaction but to be part of the potentially larger opportunity in delivering personalized marketing offers to a user. It’s still early days in the NFC space but the latest turn of events highlights the challenges of going up against the credit card companies.”
Its hard to innovate in a space so totally dominated by big entrenched players. True innovation will probably have to come from more nimble players like Square, Fig Card and Payphone. These companies can move quickly, form partnerships without legacy relationships getting in the way and build a website that’s not a flash brochure.
NFC Times has some quotes on the situation from Isis head of marketing Jaymee Johnson.
From NFC Times:
“It is not in any way a deceleration,” he told NFC Times, taking issue with a Wall Street Journal article, which he said left a “completely false impression” that Isis was “dialing back” its project.
“It is an acceleration,” he said. “We can go bigger and broader, with more breadth and faster,” adding that mobile payment for Isis was always a means to an end.
“That end is really, in general, the widespread adoption of mobile commerce,” he said.
“While it’s true we did not announce any merchants, we were and are developing solid traction with them.”
“Handset distribution is through the carriers’ channel, and they are going to have a definite point of view around secure element location and control,” Johnson told NFC Times. “When the situation gets to that point, I’m not sure how much friction there will be.”