Isis CEO: Mobile payments making 'good progress,' but no specifics yet
Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and T-Mobile USA teamed up in mid-November to launch Isis, a mobile payments network. Since then, the company has been relatively quiet about its plans for 2011. Recently, FierceWireless Editor Phil Goldstein spoke with Isis CEO Michael Abbott about the state of the venture, security issues, the role of carriers and whether device makers will help spur mobile payment adoption.
Fierce: What is the state of Isis today?
Abbott: Since November I'd say it's been evolving. It was important for us back in November to get the announcement out there so people knew that it was real. I think, as you're well aware, there can be a lot of rumors, different things can be happening out there. But if you're going to make payments work in the United States on a mobile phone, you're going to need a lot of players to come alive in the ecosystem to make that happen--everything from the merchants to the OEMs to the phone manufacturers. You have got to make sure that everybody comes together with a common standard and common protocol. And the point of why we made the announcement about Isis before we were out there marketing it is to let all of the ecosystem players know, here is the place you can come to talk about the open standards we're developing, what we'd expect people to adopt and that we're bringing the wherewithal of AT&T, T-Mobile and Verizon and the 200 million subscribers they have and the 100 million who re-up their phones every year. We're bringing that to bear to the ecosystem so you can make that investment and ensure that it is going to have something on the other side of it.
So the good news is that over the last, I'd say, eight to 10 weeks I've spent most of my time really meeting with all of the various different players in the ecosystem, and hearing their feedback and listening to them, and frankly, modifying our strategy a little bit.
Fierce: How so?
Abbott: I'd say we've really evolved into what I would call a B2B2C (business-to-business-to-consumer) company. A company that is first and foremost designed to support our partners, designed to support merchants, designed to support banks out there, and to support them in their goal of supporting their consumers--but not to own their consumers. But to really be a supplier and an enabler of the ecosystem that needs to occur.
Probably the most surprising thing for me has been the really positive response you see from banks on this. We knew the merchants would be pretty happy about it, but the banks have been equally as happy, because they're looking for one place that they can go so they can get access, they can understand the standards, security is going to be there, corporate client infrastructure is going to be there. These are things they depend on to make the payment systems work. They've done a lot of science projects, and now they want to do the real thing.
Abbott: We still haven't announced that publicly, but we're making good progress toward that front.
Fierce: Have all of the logistics been worked out?
Abbott: The first thing we're trying to do is change the consumer ritual of how they pay. So the first thing we want to do is to make it easy for them to get the product in the first place, easy to activate and bring it to life and make it work, and easy to use it. So all of our focus right now is building the first phase of this around changing the consumer ritual. We're going to do some very interesting things from a marketing perspective to make that happen that we've evolved around.
Once people see it, it'll make it very clear how we're going to encourage and incent, and how we'll get people to use the phone to make payments. And all of the other things will come along: the offers, the loyalty and the other components.
Our belief is you have to first get people comfortable with making payments with the phone. A big part of that is security. The research will tell you that people fundamentally believe that paying on the mobile phone, at least right now, is not secure. So part of what we need to do is make sure that people have a sense of security, that they know this is secure, that it's not just a sticker on the back of a phone--some open, software-based protocol. It's a hardware-based, secured, locked-down payment system they can trust.
Fierce: Can you give me any more details on how you plan to address security in marketing or in the way this is presented?
Abbott: As you can tell from talking to me, it's top of mind. It suffices to say that we'll have it both ways, from a marketing perspective, how we present the phone and the application, and frankly, how we lock it down with passcodes so that for the consumer, we put the controls in their hands. ...
And we'll certainly let them know that if they lost their phone, the money is safe and in one call it can be brought right back. So they won't have to worry about somebody picking it up and using it. You're absolutely right. The research is spot on. Consumers definitely feel, without knowing, that it's unsecure. But I'd add, if you asked people five years ago, "Do you want to use a cell phone that has no keys and you just touch a screen?" they probably wouldn't have said yes.
Fierce: Is Isis going to bring on any new financial service or credit card partners, and when will we see any movement on that, if there are any?
Abbott: I can't speak to the specifics. All I'll tell you is that there's been a lot of interested parties. Time will tell you when everything aligns and when it's appropriate to make the announcements. The interest is there and it's surprisingly strong, which is something that personally surprised me. Because I had anticipated there wouldn't have been as much interest as there has been on the banking side.
Fierce: What role do you think the wireless carriers play in this? They're obviously a big distribution partner, but what role do they play in this in terms of being able to push it forward?
Abbott: They bring an enormous amount to the table. They clearly bring the scale and the commitment to provide a common platform across multiple carriers, which is absolutely critical, we think, to gaining acceptance.
Said a different way, when they were out talking to all of the various merchants individually, and saying, "We're interested in doing our own mobile payments thing, and I'm going to bring these banks and do this special deal," the merchants pushed back on them and said, "Look, I can't deal with three or four or five of you guys, and then every other operating system coming to me and talking to me about what they're going to do. It's too confusing. If you want to make this happen you have to give me the scale, the commitment, the common platform and open architecture to make it happen."
If you look at what they're providing beyond just the scale, they're providing the commitment to Isis. We're providing the open architecture for not just the payment side, but also the offer side. They're providing the distribution to catalyze the market, which is desperately needed right now. Not to mention their brands, and the brand equity behind it, and the commitment that is going to be behind them on the security side. This isn't a small science fair startup. There's a lot they're bring to the table, and it's the merchants that really pushed them together.
Fierce: Under this system, the merchants are going to be paying for the point-of-sale terminals, correct?
Abbott: I can't get into all of the details of everything that's going on out there. What I can tell you is that what I had thought 10 weeks or 12 weeks ago, and what I've learned over the last 10 or 12 weeks has certainly been very positive on the merchant side, and there's a lot of players that are out there in the ecosystem once you step back and take more of a B2B strategy with this that want to help out and make this thing go forward, beyond just the merchants.
Without getting into too many details, how the merchants [pay for the terminals] and how they go about that, there's multiple, multiple ways of doing it, and many players that are incented to help in that process given the way we've laid out our strategy. They could pay for it themselves, they may have other suppliers, they may have other arrangements. There's a lot of ways that can happen.
Fierce: In what ways do you think NFC and the mobile payments system will be moved forward by Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Nokia (NYSE:NOK), Research In Motion (NASDAQ:RIMM) and other vendors, and how is that going to affect what you guys do?
Abbott: I don't know the details or the specifics. I read the same things you read in the papers and on FirerceWireless, too. I'm a daily reader of that, in terms if what all of the various players are doing out there. What I know is that a lot of those companies you mentioned are especially aligned around the software stacks that enable the phones. And we are beyond pleased to see that many of the manufacturers and the OEMs are now enabling the software stacks that we think are critical, we think, to moving NFC forward. We've worked on, and developed and have provided to all of the OEMs and manufacturers an open architecture standard that will support Isis and any type of payment going forward. Suffice to say, you're really starting to see the ecosystem going forward on that front beyond us just making the announcement. We'll support everybody.
Fierce: How and when do you think Isis can move from a mobile payment solution to more of a mobile wallet solution?
Abbott: It won't be a dramatic shift, like one day you shift from mobile payments. You're going to see an evolution. You'll see the first waves of it when we get started and then you'll see it evolve over time as we work through our roadmap. What we've learned through the process is that if you create an open architecture standard whereby the merchant community can use their existing loyalty programs and simply put them on the phone. They don't have to repurpose them, they don't have to rebuild them. They simply mobilize that capability and we provide an open architecture to do that.
It provides for a fairly easy migration path for what is already terrific systems and capabilities that the merchants have in loyalty, and now giving them a way to move to the phone with that. We've really evolved the strategy into one of opening the architecture and allowing everybody to plug into it, rather than having to come along in one direction, if that makes sense.