Isis calls on Apple, Google and Sprint to join mobile payments network
Isis, the joint venture established by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA to build out a nationwide mobile commerce network, said it welcomes the addition of competitors like Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Sprint (NYSE:S) as it continues to evolve its open mobile payment system model. Although analysts expect both Apple and Google to introduce their own mobile payment solutions, Isis CEO Michael Abbott told Forbes his company wants both firms to collaborate on the Isis initiative--in addition, Isis is looking to recruit additional carrier partners (including Sprint as well as regional operators MetroPCS (NYSE:PCS) and U.S. Cellular) and financial institutions.
Abbott adds that Isis is looking beyond major financial institutions and credit card providers, suggesting that all 4,000 U.S. banks could eventually join the network. "We're not just interested in the big guys," he said. "We want to let everyone play." According to Abbott, banks must support over-the-air wireless transactions to participate in the Isis network; in the future, the company will also extend its ecosystem to third-party mobile application developers. Abbott contends that total openness is critical to establishing mobile commerce's viability: "This technology has been around for a decade," he said. "What was missing was the business system to pull it all together."
At launch, Isis stated it would roll out its own Near Field Communications-enabled contactless payment network designed to compete with traditional credit card giants Visa and MasterCard. But earlier this month, Isis said it will instead open its system to interested credit issuers and banks, and align with existing m-payment infrastructure. Although Isis has long maintained plans to open its ranks to all merchants, banks and mobile carriers, the company said unexpectedly strong interest prompted the decision to accelerate the approach far earlier than anticipated.
In a recent interview with Reuters, AT&T head of business solutions John Stankey said the Dodd-Frank financial reform law also played a significant role in the Isis overhaul--the law's "Durbin amendment" vows to make payment processing less profitable by limiting the fees that merchants pay banks and networks whenever a customer completes a purchase using a debit card.
"Some changes in the banking laws occurred with the amendments that were put in with the Dodd-Frank bill... As transaction fees were limited and things were changed, it kind of changed the business model," Stankey said. He nevertheless reiterated that Isis planned all along to open its system to "all parties" over time, adding "Frankly, it just happened a little bit sooner than probably what we would have guessed."
Isis has identified Salt Lake City as its first launch market, stating it will team with local merchants and business leaders to roll out a pilot program slated to go live in early-to-mid-2012. Last month, Sprint said it plans to introduce a Near Field Communications-based mobile payments service by the end of 2011. Sprint Vice President of Product Platforms Kevin McGinnis told Bloomberg that the carrier is now working with unspecified payment networks and handset manufacturers in advance of the program launch: "We intend to make this an open solution where consumers can use their phone in a variety of physical locations," McGinnis said. "Because we're allowing other brands and other institutions to participate, they can also tell their consumers that this is available on Sprint."
Following the Isis announcement late last year, Sprint said it was weighing multiple mobile payment solution alternatives of its own. "Although we are not part of [the Isis] announcement, Sprint is currently investigating several options on how to bring mobile payments to our customers," a Sprint spokesperson explained at that time in an email to FierceMobileContent. "Given our open philosophy, Sprint does not want to compete with the card companies and banks that people already may use. We want to partner with companies that help our customers pay in the manner they choose. We're not here to recreate a proprietary solution but to enable our partners and their customers to connect in the easiest and most productive way possible."
- read this Forbes article
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