Feb. 2, 2011
Share on Twitter
Ask the average person on the street if they would prefer losing their wallet over their cell phone and
most of them will probably tell you they'd rather misplace their cell phone first, but maybe all of this is
just about to change.
Last November, Verizon Wireless, AT&T Mobility and T-Mobile USA created a mobile payment system designed to
help wireless users easily pay for certain items at physical stores using their mobile phones and MIDs (mobile
Internet devices), the three wireless carriers have said earlier today.
Dubbed 'Isis', the three companies are building the new payment network with the initial goal of setting up a
system in which people can use smartphones to easily pay for products or services directly at a retailer, known as PoS
(point-of-sale) purchases. A similar system has already been in place for the past two years in many Asian countries.
The new solution will use a technology called NFC (near-field communication), which provides short-range and
encrypted wireless communications between different mobile devices. The three carriers say the system will include
strong security and privacy protection.
Isis is expected to be available around April or May 2012, the three have said. In Japan, China and other Asian
countries, a similar system has been in place for about two years now. It was only a question of time before a similar
payment solution would be implemented in North America, some wireless industry observers have said.
The mobile world is quickly becoming a new hub for business and the timing sure looks to be perfect for this. And
all these many changes in the consumer dynamics are also rapidly gaining momentum with wireless carriers and mobile
service operators in the United States. After all, in Japan, China and a few more Asian countries, people have been using
their cell phones to pay for many small items for more than two years now, and the trend is rapidly growing.
The ISIS network aims to fundamentally transform how people shop, pay and live. ISIS will build a mobile payment
network that enables cell phones, smartphones and MIDs (mobile Internet devices) to make point-of-sale purchases by
utilizing near-field communications technology to modernize the payments process.
NFC uses short-range, wireless technology to enable the encrypted exchange of
data and various basic information between mobile devices, all at a short distance. The new system is being designed and
built to include strong SSL security and privacy safeguards, and will deliver newer levels of competition and value to
consumers and especially merchants.
And Verizon, AT&T and T-Mobile's new ISIS venture is quickly establishing credibility say many wireless industry
observers. Led by CEO Michael Abbott, a former executive at GE Capital, ISIS has partnered with Barclay’s plc and
Discover Financial Service’s network to utilize their global payment network, which is a capability that has been
lacking in other failed adoption initiatives of years past.
Although ISIS is just basically getting off the ground, there are indications that it will open up its flexible
payment solution to other wireless carriers, banks and merchants and that it continues to plan for further expansion
over the next quarter to key markets in the U.S.
But really essential to the success of this important initiative will be the willingness of U.S. consumers to change
their way of paying for just about everything. A bit like when credit cards started appearing in the mid-sixties and
then became more popular in the early seventies, the ISIS project sure has the potential to create a lot of major changes
in the way consumers pay for the many articles and items they buy almost on a daily basis.
NFC technology use in Japan and Korea is proving to be useful in many applications of day-to-day life. But NFC's overall
adoption rate in the U.S. will be greatly dependent upon three major factors that cannot be neglected:
Mobile handset functionality
The general acceptance among major banks
The broad adoption of NFC technology among merchants
NFC hardware adoption has been a critical issue so far since it requires mobile handset users to replace their cell
phones for newer devices which can simply use the technology without any issues, and especially without any security
problems. A bit like GPS technology, NFC may well be a 'defacto standard' component of most new phones that will soon
come to the market.
The three major U.S. wireless carriers stated above that are spearheading ISIS represent approximately 205 million
users, and the vast majority of these people get their mobile handsets from those three mobile operators. Each company
in the joint venture has committed to ramping their lineup of smartphones to include NFC-enabled devices by 2013.
The majority of smartphones shipped by then will have to support 'no-contact' mobile payment solutions. NFC will be
included in mobile handsets from Nokia, RIM's BlackBerrys, Apple’s iPhone 4 and 5, and especially Google’s Android operating
So make no mistake: there's definitely a huge momentum right now behind NFC, and ISIS will make sure that all the
companies involved will do their best to make the project a success. The stakes are high for companies looking for a
piece of the action, and it makes sense to go after what Juniper Forecast estimates to be a $633 billion market for
mobile payments by 2014.
But it remains to be seen how much the wireless carriers’ efforts with ISIS will contribute to that total. ISIS has
said its payment system will work with most applications. Consumers would essentially walk into a store with a NFC capable
mobile device, open up the app, place the phone near an NFC-enabled terminal and their purchase would be complete with a
digital receipt-- all this in just asecond or two.
In a nutshell, ISIS plans to create a 'mobile wallet' that ultimately will eliminate the need for consumers to carry
cash, credit and debit cards, reward cards, coupons, tickets, building IDs and transit passes. The end result is that the
mobile industry will be in direct competition with the credit card industry itself, the major banks, financial institutions,
etc. The stakes are very high in deed, and it's easy to understand the sudden interest in the three largest U.S. mobile
carriers in a technology that can bring them so much.
And as can be expected, traditional credit cards such as Visa, MasterCard and AmEx aren't taking ISIS’ new initiative
lightly either, as they too have been working hard lately on their own NFC initiatives. Just last December, Visa said
it supported commercialization of a technology from Device Fidelity that puts NFC capability on Micro-SD cards, which
can be inserted into certain existing smartphones. Visa then tested its new technology for 1 1/2 year, and additional
pilot testing is ongoing with such banks as Wells Fargo, JP Morgan Chase, U.S. Bancorp and Bank of America.
Now as you can expect, getting some merchants to install NFC technology at their end and make it work could represent
another hurdle, but it is also likely that some of the major players will create demand for the service through broader
and tighter integrated solutions. It will be in everyone's best interests to work closely with mobile handset makers,
app developers and companies like Apple and Google that develop the operating systems needed to make the phones work.
Saving time and getting better value for their money, while increasing convenience will ultimately fuel adoption,
and consumers can look forward to financial benefits such as credit and rewards management, budgeting, international
Users will be able to take advantage of time saving features like self-checkout without a kiosk, digital wallet
integration for transit passes, rapidly provide basic medical info, employee and building identification cards,
location enabled mobile coupons using GPS technology, and get theater or sport tickets.
Improving service with faster credits and rebates, and aiding in vital storage management of receipts and warranty
information are just a few examples of some of the many important aspects of NFC technology. Not to mention interconnected
communities enabling users to share ratings of vendors and product reviews. Merchants will quickly realize that letting
people pay with their phones can lead to beneficial experiences for all of those involved-- a real win-win combination.
As you might expect, NFC is still new, and there's an enormous amount of ongoing market research happening right now,
and although there have been a variety of estimates, all conclude that mobile commerce will most likely be a profitable
and rapidly growing market.
Mobile online shopping growth and NFC mobile payment technology in the United States have been recently fueled by the
massive migration of consumers to smartphones and MIDs, the many "use-case scenarios' that have been popping up from
retailers and third-party players and a significant shift in consumer behavior as more consumers choose mobile commerce
over traditional shopping.
By bringing together merchants and consumers, the mobile commerce network is set to provide an enhanced, more
convenient and more personal shopping experience. ISIS and the new wave of mobile payment startups that we are seeing
now in many places will most likely bring mobile payments to the mainstream and probably a lot faster than some think.
Share on Twitter
This article was featured on Business 5.0.
Advertise on E-Commerce News
If you have a product or service that deals with the ecommerce
or ebusiness field, advertising on E-Commerce News can bring
you new sales leads and close new marketing channels. This news
portal is read by over 25,000 people a week.
Businessmen and woman that either own an ecommerce website, an
ebusiness franchise, a B2B commercial exchange or by people in all walks
of life that need to keep abreast of this fast-changing field. For
more information on the many advantages of advertising on our news
portal or to request pricing information, please send us an
and a marketing representative will be glad to answer you