Isis Delays Two-City NFC Trial; Asserts Telco, Issuer Support Remains Strong
The Isis joint venture has disclosed it will miss its deadline for launching its much-anticipated two-city NFC trial in the U.S., blaming small problems that it says could prevent it from “getting the customer experience right.”
The launch of the Isis Wallet trial in Salt Lake City, Utah, and Austin, Texas, will now be moved back until at least October. The joint venture, which was formed in late 2010 by mobile carriers AT&T Mobility, Verizon Wireless and T-Mobile USA, had set the deadline for launching the pilot this “summer,” which would have given it until the end of next week.
The venture said it would provide an update on the launch plans next month, and it's possible the project will launch in October.
It’s not the first time the project has been delayed. Plans had originally called for the project to launch even earlier in 2012.
Isis head of marketing Jaymee Johnson declined to say specifically what is causing the delays, but he was quick to add that support for the project by Isis’ telco owners and the participating payment issuers remains strong.
“It is related to the core build of the platform and core experience that flows from that,” Johnson told NFC Times. “It has nothing to do with business partners, investors or payments ecosystem.”
Tying Up Loose Ends
It’s not a problem of handset availability, either, said Johnson, who compared the problems more to a “punch list” for a building project, that is, a to-do list of items needed to be finished at the end of a project. Such high-end phones as the Samsung Galaxy S III and the HTC One X and the HTC Droid Incredible 4G LTE have already been certified for Isis by at least one payment scheme, MasterCard Worldwide.
A source working on the project, speaking anonymously to NFC Times, largely backed up Johnson’s characterization of the delays.
“There’s no major thing, it’s logistical issues–getting (NFC SIM) cards to stores, signs in stores, training people,” he said. “It’s enormously complex, and there are a bunch of loose ends to be tied.”
The source added that one problem has been the fact that the big U.S. carriers are not used to working together on a project.
Plans call for three issuers, JPMorgan Chase, Capital One and American Express, to offer NFC payment applications, which would be stored on NFC SIMs issued by the telcos. Issuer Barclaycard US will participate later, said Johnson. Barclaycard had originally been announced as a participant in the two-city trial at launch.
Isis has signed up a list of roughly 50 merchants in the two cities, and plans to enable loyalty, couponing and other offers in addition to payment.
But Isis has declined to say how many merchant terminals will be equipped to support the Isis mobile-commerce service, “SmartTap,” enabling consumers to pay and redeem the coupons, points or offers with one tap of the phone.
Most merchants are expected to only accept contactless payment, as they do now with contactless cards, such as 7-Eleven convenience stores and McDonald’s restaurants.
The list of merchants Isis announced includes a handful of national brands, such as Dillard’s and Macy’s department store chains, as well as Foot Locker, Jamba Juice and clothing chain Aéropostale. That is in addition to a number of local establishments.
Isis announced the list in May and hasn’t disclosed any more merchants, though did announce support from suppliers of fuel dispensers. This would enable consumers to tap to pay at the pumps as well as inside gasoline stations to buy snacks.
Johnson indicated that loyalty rewards and other incentives will be important for the Isis launch, though declined to say if getting SmartTap right was one of the causes for the delay.
Scaling Problems Ahead?
Still, the list of merchants has been seen as disappointing by industry observers and the new delays will only add to that disappointment. And while analysts whom Isis directed journalists to speak to today said NFC technology is not to blame for the delays, that might not be the perception among many in the mobile-payments community.
“The continued delays are going to give every other issuer pause as to how scalable this is when you’re talking about tens of issuers, hundreds of merchants and millions of users,” Cherian Abraham, head of the U.S.-based mobile payments and banking practice for information services company Experian, told NFC Times. “The secure element-centric NFC model; we don’t think it is inherently scalable. There are too many moving pieces.”
Google Wallet project manager Robin Dua speaking last month at a Google developers event, charged that Isis won’t be able to scale, just as the first version of Google Wallet couldn’t. Google later went to a cloud-based wallet, though keeps an NFC front-end.
Isis, Dua said, is “working on direct provisioning of cards from an issuer to secure element, in their case, the SIM. We just don’t think that model is scalable, for the simple reason that there are 8,500 issuers in the U.S.”
Isis’ Johnson rejected that contention, indicating that Isis wouldn’t have to sign up lots of banks or other issuers to reach a high percentage of consumers.
“We will launch with AmEx, Chase and Capital One–between those three, we are able to reach over 100 million cardholders,” he told NFC Times, adding that unlike cloud-based wallets as Google is offering, “Isis allows issuers to extend their existing card service relationships into the phone.
“We don’t intercept it,” he said. “We don’t try in any way to create a barrier between the bank and its customers.”
Isis, however, will charge banks and credit card companies a fee to rent space on the telcos' SIMs, with the proposed asking price by the joint venture, at least back in June, about $5 per account per year.