Isis Mobile Payment Pilot to Launch in Salt Lake in 2012

Swanson emphasized that Visa's approach is to give customers mobile access to their existing credit card accounts, not ask them to set up new accounts -- as they might have to do with Isis. "We want to give consumers access to the accounts they already have in their wallets, and we don't want to introduce friction as we roll out mobile payments so that people have to open a new account," she said.

To participate in the Isis Salt Lake City pilot, a customer would presumably have to register for a Discover card account backed by Barclaybank to use the network, unless Isis can get Visa, MasterCard or other credit cards and banks to cooperate with its endeavor, said Bob Egan, an analyst at The Sepharim Group.

"Technology is the least of anybody's worries with mobile payments in the U.S.," Egan said. "The real struggle is what the Isis business plan looks like. One of the continuing tensions in this industry is between issuing banks and alliances like Visa and MasterCard in how they redistribute wealth" from traditional credit card purchases -- and now from mobile banking.

Isis will probably attempt to forge relationships with the largest credit card companies, since Discover is either No. 3 or No. 4 and it's unlikely that many consumers and transit riders in Salt Lake City use its cards, Egan noted. Having Isis and its three wireless carriers involved in the Salt Lake City pilot only complicates the business model, he added.

"I doubt everybody is going to play nice in mobile payments in the U.S.," Holland added. "Success or failure ultimately depends on whether merchants uptake it and consumers embrace it, but getting to that point is not something you drop in place and suddenly it works."

Isis and Visa are not the first to be making moves to smartphone-based mobile payments in the U.S. Apple is rumored to be incorporating NFC technology into the upcoming iPhone 5, potentially giving customers the ability to use their iPhones to make payments at NFC terminals -- using funds from their iTunes accounts to pay for their purchases. Each iTunes account is already backed by a major credit card and an issuing bank, and that might give Apple an advantage over Isis, Visa and other companies planning mobile payment initiatives, analysts noted.

Google is reportedly working with MasterCard and Citigroup on a mobile wallet system that would use NFC capability in versions of the Nexus S and other Android -based smartphones.

Isis will need to update the Utah Transit Authority's contactless readers so they're capable of interoperating with the Isis network; it will also have to make the Isis capability work on phones from "multiple manufacturers and multiple OS's," said Jaymee Johnson, head of Isis marketing. "It's not going to be a single phone, and Isis has been working [on NFC] with all the manufacturers for a year-plus now, privately."

The Sepharim Group's Egan said it will be no small task to get the Isis system to work on multiple operating systems and give it a consistent look on each, but that task won't be nearly as difficult as forging relationships with other companies.

Isis hopes there won't be a conflict with banks and payment networks that aren't part of its group, Johnson said. "It's already a complicated ecosystem, and for Isis to work... the parties need to work well with one another," Johnson said. "The Isis story has been openness to all parties."

Avivah Litan, an analyst at Gartner, also is dubious about how well interested parties will cooperate with Isis or other U.S. mobile payment systems.

"It's going to be confusing to consumers who will go to a store to make a mobile payment and won't understand 'What is this Isis thing?' It's going to be very confusing," said Litan.

Alistair Newton, another Gartner analyst, emphasized that the Isis Salt Lake City venture is "only a pilot" and noted that dozens of other pilots conducted globally "have delivered interesting findings but no concrete services."

In Salt Lake City, Newton said, some consumers who already use contactless cards will have to be persuaded to stop using those cards and start using mobile devices. "Sure, they will do this for the trial. But after that, there's got to be more of a 'coolness' factor to persuade customers to switch," Newton added.

In the end, Newton said that all Isis does is "add another party" -- the wireless carriers -- "to the transaction stream who want to take a cut of a currently shrinking revenue stream."

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 mhamblen@computerworld.com.

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