SXSWi: Mobile payment adoption hurdles; Isis launch

SXSWi: Mobile payment adoption hurdles; Isis launch

Mobile payments haven't become as mainstream as some proponents had hoped, admitted several mobile technology industry representatives during a March 10 South by Southwest Interactive panel in Austin, Texas. Yet the panelists predicted that will change within the next few years, thanks to the next wave of mobile payment technology.

One of the companies determined to make that happen is mobile payments platform Isis -- whose chief marketing officer, Ryan Hughes, was part of the panel. In addition to making major credit card networks and banks compatible with its service, Isis is attempting to change mobile payments from an added, inconvenient step for merchants and consumers to a seamless process -- and make mobile payments just as mainstream as the smartphones that enable them.

What is Isis?
Isis is set to officially launch in two test markets -- Salt Lake City and Austin, Texas -- in the summer of 2012 before rolling out nationwide at the end of the year. It is a mobile payment platform, similar to Google Wallet, and employs near field communications (NFC) technology that allows consumers to make purchases using their mobile devices. The NFC smart card in the phone communicates with an NFC chip in the retailer's POS terminals to provide a secure transaction.

Consumers will use Isis's mobile wallet app to store virtual versions of their credit cards or prepaid cards on their phones. It's up to the banking partners, however, to determine which cards they will authorize for use. Before consumers make a transaction, they'll have to unlock the Isis wallet by entering a four-digit PIN. After they make their choice of card, they can simply tap their phones to a contactless payment terminal to complete the sale.

What didn't work in the past
The South by Southwest panelists blame the mechanics of mobile payments for its slow adoption as consumers saw little added benefit of swiping a phone instead of a card, while merchants were hesitant to upgrade their equipment to accommodate NFC technology.

Although the early adopters of Google Wallet seem to have responded favorably to the service, it's still not in widespread use. The Google Wallet mobile app went live in 2011 with just one carrier (Sprint), one type of credit card (MasterCard from Citigroup) and a limited number of mobile phones that it could run on.

A wider acceptance?
Isis hopes to have better success integrating its product into the retail marketplace and has tried to prepare a much broader base of support by lining up major partners to cover every aspect of the mobile wallet process. For starters, Isis is a joint venture of Verizon Wireless, AT&T Mobility and T-Mobile USA -- three of the four largest wireless carriers in the U.S. It already has agreements with four payment networks, including Visa, MasterCard, Discover and American Express -- and with three major banking partners (Chase, Capital One and Barclaycard US) that together have about 100 million customers.

In addition, Isis is working with several mobile phone manufacturers, including HTC, LG, Motorola Mobility, RIM, Samsung Mobile and Sony Ericsson. They will be producing NFC-enabled mobile devices that incorporate Isis' technology standards. Another technology manufacturer will offer smart cards with Isis-compatible NFC technology that can be added to some existing mobile phones.

Isis also recently announced that leading payment terminal providers, including VeriFone, Ingenico, ViVOtech and Equinox Payments, will integrate and support Isis in their current and future product lines. That means customers will be more likely to encounter payment terminals at stores that will allow them to use Isis.

"The agreements with leading payment systems providers will help accelerate the wide scale introduction and adoption of mobile commerce," reads an Isis press release announcing the agreement.

Will retailers get onboard?
Isis won't be successful unless enough merchants are willing to upgrade to terminals that incorporate the NFC technology. It's a big expense, but there are some ways that retailers can reduce their costs.

For example, a retailer who wants to offer mobile payment options to customers may opt to upgrade just a few terminals at first. Once a terminal has the NFC capability, it should be a matter of simply upgrading software to incorporate applications like Isis, Google Wallet or other similar services that come along.

POS terminal manufacturer Verifone says the addition of NFC will increase the cost of a new terminal by about $35.

Although upgrading their technology will cost merchants, making their businesses compatible with mobile payments has its pay-offs. According to Isis' marketing materials, the relationship building that its mobile wallet enables will be the technology's most important feature for merchants.

Since the Isis Mobile Wallet can incorporate loyalty card information, coupons and specially targeted offers and promotions, retailers will be able to customize shoppers' experiences. Merchants, for example, could provide special offers in newspaper or magazine ads that customers can scan and store in their phones (so they don't have to remember to bring the coupons to the store). Customers can also store loyalty program history in their phones rather than carry around a bunch of stores' loyalty cards.

The road ahead
Isis won't be alone in promoting mobile payments. Google Wallet is expected to add carriers, phones and banking partners to its system. PayPal has launched its own brand of mobile wallet, and industry observers say that major retail chains such as Walmart and Target are poised to introduce some type of mobile wallet system specifically geared toward their stores as well.

One way or another, it looks as though retailers who want to remain competitive will soon be making accommodations for some form of payment system via mobile phone.

Published: March 14,2023