The mobile commerce joint venture Isis has been working for months to engage Visa, MasterCard and other major U.S. banks in smartphone payments with near-field communication (NFC) technology, an Isis marketing executive clarified late Wednesday.
The Wall Street Journal reported early Wednesday that Isis had dropped its plans for its own system, in which carriers collect payments made by smartphone in exchange for a system open to Visa and others. The Isis joint venture includes AT&T, Verizon Wireless and T-Mobile USA.
However, Isis Marketing chief Jaymee Johnson told Computerworld that Isis had formally announced in a press release on April 4 that it was opening its infrastructure to "all merchants, banks, payment networks and carriers."
Johnson argued that the Journal story, widely reported by other media including Computerworld, was "profoundly incorrect," because Isis had already announced it was "opening up the platform to all payment networks and platforms."
But analysts said Johnson's concerns about the report were overblown, even if the article was late, because Isis was clearly planning to work with Barclaybank US and Discover Financial Services when it was conceived last year.
Perhaps Isis had planned to draw in large credit card companies like Visa all along but started small, several analysts said. "This Wall Street Journal account is a matter of semantics," said Bob Egan, an analyst at The Sepharim Group. "[That] we're not any closer to mobile payments in the U.S. is the main point."
Johnson said that Discover and Barclaybank were "initial" participants, and refused to call them "exclusive" to Isis. While he noted Isis has been talking to all the major banks and credit card processors for months, he refused to confirm any others are involved.
Gartner analyst Mark Hung said that Citibank is widely known to be working with Isis, but Johnson said he couldn't confirm Citibank's involvement.
Isis' openness to other banks and credit card processors was part of the April press release, which focused on a Salt Lake City pilot of smartphones set for mid-2012, although the openness part was given less emphasis by Isis, as well as Computerworld and others' coverage.
Johnson said Isis decided last year to "go to market with fewer [companies] and ultimately the decision was to open to all payment networks." Ultimately, Isis could end up working with three or four banks and credit card processors, although not a much larger group, he predicted.
Johnson called the current state of Isis as an open mobile system an "acceleration" of its original mission and not a "dialing back" as depicted in the Journal article Wednesday. "We [Isis carriers] were never going to be the bank, and that may be an important clarification," Johnson said.
Johnson also said Isis believes that the secure element of transactions containing a user's personal information should be included in a smartphone's SIM card, a position maintained by many carriers globally but opposed by some phone makers, who want the secure element embedded in the phone or NFC chip.
That would mean that Verizon Wireless would need to sell all of its phones with SIM cards, Egan noted, since many models don't have SIM cards today. He said it isn't clear how much of a debate will develop over where the secure element resides, either in the phone, its NFC chip or the SIM card.
Johnson said Isis also hopes to provision NFC capabilities in smartphones, acting as what the industry calls Trusted Service Managers.
Egan said that the initial months of Isis seems to have taught the carriers a few things, including that retailers don't want to be bothered with working with a smaller card companies like Discover, which many retailers don't currently support, or to be required to support smartphones with NFC readers and compatible software.
"Retailers care about technology innovation only to the extent that it lowers their costs, raises their sales or reduces fraud," Egan noted. "Adding another card type, or moving people more quickly through the checkout with a phone meets none of those requirements."
Given that the Isis pilot is still far off, as well as the inherent complexities of creating a mobile payment system, Egan joined other analysts in concluding that NFC won't be coming any time soon, at in full force, to the U.S. "Card payments ... are complex, hard to build and monitor," Egan noted. "The process has just begun."
Avivah Litan, another Gartner analyst, said that in light of today's Isis reports, "NFC technology is ready in the lab, not on phones, but mobile payments are all about the business model, not technology."
"Isis shows that if you want to go it alone, you won't succeed. You can't expect merchants and consumers to work with one bank. You can't force anything down anybody's throat," Litan said.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is firstname.lastname@example.org.