Isis Announces Plans for National NFC Rollout for This Year

The Isis joint venture has announced its long-anticipated U.S. national rollout, which is to begin later this year, with the JV and its member mobile carriers–Verizon Wireless, AT&T Mobility and T-Mobile USA–deeming the NFC ecosystem and their own Isis mobile-commerce platform ready for a large-scale expansion.

Isis today said its Isis Mobile Wallet will go live in cities across the country before the end of the year, and told NFC Times it would add more bank issuers and more major merchants to the platform.

In addition, the three Isis telcos will continue to ship millions of NFC phones to their shops each month–there are already 20 million shipped to date. They are also ordering cases for the iPhone, which is expected to include the iPhone 5. The iPhone cases, to be introduced later this year, come with a built-in antenna and NFC chip. Isis added that it would also introduce NFC-enabled phones supporting Windows Phone and BlackBerry 10. There have been about 35 NFC phone models offered to date across all three operators, all of them Android-based.

Besides NFC phones, the Isis carriers are ordering NFC SIM cards for national distribution or plan to do so soon.

NFC Times first reported the national launch plans in May, citing sources who said Isis and one or more of the telcos had already made the decision to go nationwide this year, and it was only a question of when, not if they would launch.

The national commercial launch will follow the two-city trial Isis held the past nine months in Salt Lake City, Utah, and Austin, Texas. While consumer take-up and merchant adoption is considered to have been lackluster in the two cities, Isis contends the results were encouraging.

That includes “active” Isis Mobile Wallet users, who tap more than 10 times per month and two-thirds of active users opting in to receive offers and messages from brands and following, on average, seven brands.

Isis declined to release figures of the number of active users or transaction data, however.

“We're happy with where we are with that metric and the fact that the active wallet (users) are engaging in mobile commerce; they're following merchants and getting offers,” Jaymee Johnson, head of marketing at Isis, told NFC Times. "In terms of what the consumer stance is, certainly the more places that you can use it, all of those metrics will increase."

Challenges Ahead
But he acknowledged the multiple challenges that lie ahead, including gaining more merchant acceptance and building consumer awareness and adoption on a national scale.

“I mean, what we are trying to do, to be clear, is really hard. It is not easy,” he said. “But at the end of the day, you can have the best wallet experience that we could ever design, and if I can't use it anyplace, it's of limited value, so I would say that trying to drive contactless acceptance is going to be one of the things that we always track and always push.”

Isis cited figures from U.S.-based research and consulting firm Aite Group, which forecasts there will be 1.3 million locations in the U.S. with “contactless-ready” point-of-sale terminals by the end of the year, though it’s not clear if all of these would be activated by then. More contactless terminals are expected to come online over the next few years in the U.S. as part of more secure EMV terminals merchants will be installing.

The Isis wallet, at present, supports applications issued by JPMorgan Chase, Capital One and American Express, along with a prepaid Isis Cash application. The payment applets, stored on SIMs issued by the telcos, support either Visa payWave, MasterCard PayPass or ExpressPay from American Express.

Isis, declined to name any of the merchants planning to support its wallet for the national rollout, except for restaurant and specialty drink chain Jamba Juice and vending machine operator Coca-Cola North America, which both claim the Isis wallet has increased customer counts in Salt Lake City and Austin during the pilot. Jamba Juice has nearly 800 outlets in the U.S.

Still, Isis faces major challenges as it tries to recruit national retail chains to support its mobile-commerce platform, which is designed to enable merchants to accept coupons, loyalty and offers. Isis hopes to earn revenue from merchant and consumer brands by enabling targeted promotions through its platform. That’s in addition to SIM-rental fees from banks and possibly other fees.

Competing Against MCX
Among the challenges is a competing mobile-commerce and wallet platform being built by the MCX consortium, made up of more than 30 large chains, including Wal-Mart, Target and Best Buy.

MCX, short for Merchant Customer Exchange, whose list of merchants also includes large U.S. convenience store chains, gasoline stations and clothing retailers, has said it will launch its mobile-wallet platform with bar codes and cloud-based technologies to start off with, not NFC, though it has not said when. It has said it might support NFC later.

The merchant group may be requiring its members to sign an exclusivity clause preventing them from participating in other wallets, such as Isis or Google Wallet, for a period of time. And some of the group’s leaders have said in the past they don’t want to share data with other wallet or mobile-commerce platform providers.

Isis’ Johnson, however, said he doesn’t believe Isis has lost any prospective merchants' partner to MCX and contends the merchant group is mainly interested in lowering transaction fees.

“So far, our observation is MCX isn't about Isis,” he said. “On some level, it’s not really about mobile; it's about a view by merchants sort of against the current payments ecosystem. MCX is another player, and at the early stage, where different alternatives–MCX, Isis, others–are emerging and trying to be viable and establish themselves, the presence of another player in the market just gives those who are inclined to wait justification to do so.”

Merchants will buy into Isis over MCX for its “open platform” and “scale,” he contends. “Why (would) they work with MCX? I don't know; I would speculate that it has a lot to do with interchange and other related issues.”

Pilot Merchant: Consumer Awareness Low
Isis said that over the course of the nine-month trial, acceptance terminals grew from 1,000 to 4,000 in the pilot cities, though Johnson couldn’t say how many of these supported SmartTap software, which would enable users to pay, and redeem coupons, reward or offers in a single tap of their NFC phones. Most support only contactless payment.

An informal survey conducted by NFC Times of mainly small merchants participating in the trial in Salt Lake City and Austin, between May to July, showed merchants generally generated a very small percentage of their transactions from Isis Mobile Wallet users. In some cases, merchants would see only a few users tapping per week.

"I just don't think it's well known, and I think the technology in America is not quite accepted yet,” said Shelly, manager of the Wild About Music store in Austin. “I understand we need to have it in place before it can get there, which is why we signed up to do it. (Also) I think the fact that the iPhone 5 never put the chip in, so we lost that whole market that was expected.”

Isis plans to introduce its second-generation mobile-wallet software in the pilot cities before the national launch, Johnson confirmed to NFC Times. As NFC Times reported earlier, the new user interface, developed by Austin-based app developer Mutual Mobile, aims for a smoother performance, quicker response times and sleeker and cleaner design, sources said.

But gaining widespread adoption wasn’t the goal of the pilot, said Johnson, confirming that Isis has pulled back on promotion during the past few months. The purpose of the trial was more to give the whole system a “shakedown,” he said.

“The first point is, the system works, the technology works, it scales,” he told NFC Times. “We would be the first to acknowledge that this is the start of something, it's not the end. It gets better from here on out. But we have enough to say the market's ready; we're ready to go.”

Perhaps Isis’ biggest challenge will be to build consumer awareness for the mobile wallet in a country where mobile payment has yet to take off and where a number of technologies compete for attention. Johnson would not be drawn on the size of Isis’ planned advertising budget, though said promotions would begin in the fall by Isis and partners.

“We are launching on a national basis; that doesn't mean that we buy every single advertisement on American Idol,” he said, referring to a popular reality singing competition show in the U.S. “The payment-driving efforts and the demand-driving efforts will be national scale. You'll be able to walk into a store from New York to LA to Seattle to Miami and get Isis.”

Kiona Smith-Strickland contributed to this report.

HEADLINE NEWS

Xiaomi's Mi Pay Joins Crowded ‘OEM Pay’ Market in China, as Device Maker Seeks to Slow Slide in Sales

NFC Times Exclusive Insight – Adding mobile payments capabilities to flagship smartphones appears to be a must-have feature as OEMs fight for market share in China’s hotly contested phone market.

OTI Continues to Cut Costs and Position Itself for Growth, but Won’t Project When It Will Finally Turn Profit

NFC Times Exclusive Insight – Contactless reader and NFC vendor On Track Innovations reported lower expenses and says it has positioned itself to earn more revenue from services in addition to its reader sales and possible NFC patent income–all in hopes of making the company profitable for the first time in its history. The question of when that will happen remains unanswered, however, and OTI doesn’t provide guidance.

Apple Strikes Back at Australian Banks Seeking to Bargain Collectively, Branding Them a ‘Cartel’

NFC Times Exclusive Insight – Apple has responded to a request to regulators by four major Australian banks to jointly negotiate terms for their adoption of Apple Pay and to boycott participation during the negotiations with a strongly worded letter, branding the group’s proposed action worthy of a “cartel” that would “harm consumers, lead to less competition and less innovation and set a troubling precedent.”

Visa Policy on Alternate PANs Leaves Cardholders Out in the Cold in Taiwan

NFC Times Exclusive – Fourteen banks in Taiwan launched mobile payments using host card emulation late last week or plan to do so in coming weeks, but none of the cards that the banks’ customers can load into their new Android wallet apps will sport the Visa logo–one of the two main bank card brands in Taiwan. 

Reports: ZTE Pay to Join Crowded Mobile Payments Market in China

NFC Times Exclusive Insight – Credible reports say that Chinese smartphone manufacturer ZTE plans to join the “OEM Pay” club, and that the company has signed an agreement with payments network China UnionPay to deploy an NFC-enabled mobile payments service in China.

STMicroelectronics Sees Booster Technology as Way to Become Competitive in NFC Wearables, Smartphone Markets

NFC Times Exclusive Insight – Chip maker STMicroelectronics is hoping its $77.8 million-plus acquisition of the NFC assets of Austria-based ams AG will help it accelerate its move into the Internet of Things market, especially for wearables.

Taiwan Banks to Launch Mobile Payments with HCE, but Only with Mastercard-Branded Cards, Using Local Tokenization

Aug 4 2016

NFC Times Exclusive Insight –  More than a dozen Taiwanese banks and their mobile payments joint venture along with Mastercard plan to announce Thursday the launch of mobile payments using host card emulation, with more banks to follow.

NXP Reports Growth in NFC Revenue for Second Quarter Thanks to OEM Pay, Transit Ticketing in China

NFC Times Exclusive Insight – NXP Semiconductors reported growth in its Secure Connected Devices unit, which includes its NFC chips and secure elements, as the Netherlands-based chip maker is benefitting from the rollout of mobile payments services by smartphone OEMs and renewed interest in NFC transit ticketing in China.

Analysis: Apple Pay U.S. Transactions Growing but Base ‘Very Small’; and Rivals Not Apparently Catching Up

NFC Times Exclusive Insight – Apple’s boast this week that its mobile payments service accounts for three out of four contactless payments in the U.S. says little about the number of contactless transactions it is recording stateside, but does indicate that Apple has maintained its lead over rival NFC-enabled wallets.

Swiss Competition Officials Decline to Investigate Apple Pay Antitrust Complaint for Now

NFC Times Exclusive – A few days ahead of the official launch of Apple Pay in Switzerland earlier this month, Swiss consumer protection group Konsumentenschutz SKS filed a complaint with the Swiss competition officials, contending that Apple’s policy of locking down the embedded chips in its NFC devices is “monopolistic” and is a violation of the country’s antitrust laws. The regulator, however, has declined to launch a formal investigation, deciding to continue to observe the market for now, NFC Times has learned.

Australian Banks Form Bloc to Counter Apple’s ‘Divide-and-Conquer Strategy

Aug 10 2016

NFC Times Exclusive Insight – In an unprecedented move, four major Australian banks, including three of the country’s big four financial institutions, have asked the

Mastercard’s Planned Acquisition of VocaLink Could Speed Up Commercial Launch of Zapp’s Mobile Payments Service

NFC Times Exclusive –  Mastercard’s planned acquisition of UK payments company VocaLink may offer the final boost needed for VocaLink’s Zapp unit to launch its long overdue mobile payments service, the Pay by Bank app.