Telco joint venture Isis has reportedly
announced a spectacular u-turn by pulling plans to launch a
near-field communication (NFC) m-payments network, originally
designed to rival Visa and MasterCard.
According to a report by the Wall Street
Journal, two people close to the US wireless carriers that
formed Isis – AT&T, T-Mobile and Verizon Wireless – said
setting up a separate network would have been “too difficult and
time consuming”.
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The same source revealed Isis now plans to
launch a perceived ‘less ambitious’ mobile wallet that stores and
exchanges account information on a users existing payment card –
including that of Visa and MasterCard.
The WSJ’s source claims the carriers
have now embraced their competition and are reportedly now in talks
with the dominant networks to participate in the system in a bid to
recruit as many users as possible and ensure Isis does not fall
behind in the m-payments race.
Isis’ current strategy shows a distinct break
with its original fighting spirit during its launch in November
2010, demonstrated by CEO Michael Abbott throwing down the gauntlet
to rival payment networks Visa and MasterCard as he publicly
positioned Isis as a “competitive alternative” to the established
schemes.
A spokesperson for Isis told the WSJ
Discover remains its partner but confirmed it was open to new
alliances.
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By GlobalDataThere were no signs of such
movements when CI spoke to Jaymee Johnson, director
of strategic development for T-Mobile and part of Isis’ leadership
team, in March 2011. Johnson seemed optimistic for Isis’ future and
claimed it could realise a dominant market position in m-payments
thanks to its unique relationships with handset manufacturers and
merchants.
“There hasn’t been an obvious
platform in which to build a mobile payments ecosystem around,”
said Johnson.
“Isis gives the market the
opportunity to do so in a way that is almost singular, it breaks
the business model stalemate that has arisen.”
He also said there was no fear
within Isis that it was falling behind its competitors as the slow
pace of terminalisation meant no player was ahead of the game.
Richard Crone, founder of Crone
Consulting, said it is difficult for competing wireless carriers,
each with their own entrenched systems and procedures to “play nice
together”, but believes they will use the mobile handset’s SIM card
to ensure their financial participation in any NFC payment scheme,
with or without their own network.
“This is another example of how hard it is for
new intermediaries – handset makers, carriers, Google – to insert
themselves into the payment process,” said Crone.
“Merchants and banks want fewer intermediaries
as more players will add more cost and complexity to the payment
process. Merchants are looking for solutions that will enable
steering to their own lower cost or ‘friendly tenders’ such as
private label credit, prepaid gift cards and PIN debit.”
Crone claims it remains to be seen whether
merchants and banks will move quickly enough to take advantage of
their incumbent position, miss the opportunity to launch their own
self-branded offerings or do nothing and cede the ground to new
intermediaries.
