Hulu for Mobile Payments: Carriers Form Isis Joint Venture

Think of it as “Hulu for mobile payments.” AT&T, Verizon & T-Mobile have joined forces to introduce an NFC-enabled mobile wallet through a joint venture called Isis. According to the release out this morning:
  Founding members, AT&T Mobility, T-Mobile USA and Verizon Wireless, collectively provide wireless services to more than 200 million consumers who will have access to the Isis service. Isis is working with Discover Financial Services’ payment network, currently accepted at more than seven million merchant locations nationwide, to develop an extensive mobile payment infrastructure for the joint venture. Barclaycard US, part of Barclays PLC, is expected to be the first issuer on the network, offering multiple mobile payment products to meet the needs of every customer . . . The new venture will enable contactless mobile payment and commerce services using near-field communication technology. NFC uses short-range, high frequency wireless technology to enable the encrypted exchange of information between devices at a short distance. The new system is being designed and built to include strong security and privacy safeguards.  
  This is a formidable group but it remains to be seen whether consumers will adopt. Still the growing competition around mobile payments makes their adoption inevitable. Yesterday at the Web 2.0 conference Google CEO Eric Schmidt said that the next update of Android would enable NFC mobile payments. Apple will also introduce similar functionality for the iPhone at some point. Sprint is not a part of the carrier joint venture and introduced its own mobile payments initiative recently. Visa is also independently working on mobile payments programs. Amazon and PayPal are similarly contenders in the space. And there are a growing number of mobile payments “startups,” some of which are very heavily funded, such as Boku. Because I don’t know quite enough about technical infrastructure issues I can’t pick winners and losers at this point. I can say this about the broader market:  
  • Consumers will adopt mobile payments (provided they can be assured of security)
  • They won’t adopt any system that puts charges on their phone bills; a system that can tap into existing accounts creates the least “friction” (e.g., Sprint, iTunes, Amazon, Google Checkout)
  • Scale will be critical; those without it will be marginalized
  • No one player or even constituency can “win” on its own; there will need to be cooperation and standards that are widely accepted.