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Isis and the banks!

Ajit Deshpande - - 0 Comments

Contactless mobile payment technology has been around for almost a decade now, but has not yet become main-stream in the United States. Isis, the joint mobile wallet initiative undertaken by AT&T, Verizon and T-Mobile, has been touted as a key player in driving technology and consumer adoption in this space. Last week, the company announced that three large banks, Wells Fargo, Chase and American Express, as well as a number of key merchants including Jamba Juice, Coca Cola and Toys’R’Us had partnered with it to offer cash and in-kind incentives of up to $300 over the next three months for each consumer that used the Isis Mobile Wallet.

Contactless mobile payment makes logical sense for the long run, since it leverages the pervasiveness of mobile devices to enable online tracking and management of financial transactions. However, the technology has seen adoption challenges on two main fronts. First, deployment of Near Field Communication (NFC) compatible Point-of-Sale Systems needs merchants to commit to capital expenditures and PoS integration. Second, getting consumers to adopt and start using mobile wallets is a significant challenge around user experience, credentials management etc. With last week’s announcements, Isis is attempting to address both of the above challenges to some extent, thus providing some much needed momentum to contactless payments. Carriers have much to gain from this, since they control the mobile handset, and so would much rather have the mobile phone become the hub for all transactions. For merchants and banks too, the benefits are significant early on – high-end early-adopter consumers for the merchants, and ‘top of the wallet’ spots for participating bank credit cards.

Significant headwinds still remain in this space. Large corporate entities such as Google and Sprint, as well as startups including Opus portfolio company Sequent continue to chip in to spur market adoption, yet NFC continues to have its challenges. Apple continues to be the most visible holdout on the device front, and NFC compatible PoS system deployment continues to be slow. Can Isis and its banking and merchant partners create enough of a positive feedback loop with these near term offers to successfully lure and retain consumers? Consequently, could 2014 eventually become the ‘year of NFC’? All that remains to be seen…

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