Three of the largest American telecom carriers made official today their plan to launch a national mobile payments network.
AT&T, T-Mobile and Verizon Wireless announced their "Isis" joint venture would be "a mobile payment network that utilizes mobile phones to make point-of-sale purchases." The joint venture partners say that Isis will be launched in several unnamed markets in the next 18 months.
The three carriers say that they "collectively provide wireless services to more than 200 million consumers who will have access to the Isis service."
Isis also has brought under its tent the Discover Financial Services' payment network, which claims acceptance at more than seven million merchant locations nationwide. Discover is the fourth largest payments network in the United States behind Visa, MasterCard and American Express. MasterCard and Visa are payments processors, while AmEx and Discover are processors and card issuers.
Isis also reported that Barclaycard US, part of the U.K.-based bank Barclays PLC, will be the first card issuer on the network.
Michael Abbott, a former GE Capital executive with experience in the payment and technology industries, was named Isis CEO. Abbott says in a statement that Isis initially will provide a more convenient and personalized shopping experience for consumers, but that the founding partners have more ambitious goals.
"While mobile payments will be at the core of our offering, it is only the start. We plan to create a mobile wallet that ultimately eliminates the need for consumers to carry cash, credit and debit cards, reward cards, coupons, tickets and transit passes," Abbott said.
"We believe the venture will have the scope and scale necessary to introduce mobile commerce on a broad basis. In the beginning, we intend to fully utilize Discover's national payment infrastructure as well as Barclaycard's expertise in contactless and mobile payments," Abbott said. "Moving forward, Isis will be available to all interested merchants, banks and mobile carriers."
That sends a powerful message that Isis intends to take on payments processors Visa and MasterCard and the large credit- and debit-card issuing banks, setting the stage for a war over payments between the massive telecom firms and the huge banking industry.
A consumer making a purchase with her smart phone could choose to have the bill sent to her monthly phone statement from her carrier, shutting out the card-issuing banks and the processors altogether. Theoretically that would mean not only the end of the processors but also cut deeply into payment-related revenues for banks.
However, a consumer could also choose to continue to send the bill to her credit or debit card account.
The Isis system will team smart phone and Near Field Communication (NFC) technology to give consumers the capability to wave their phone at a point-of-sale (POS) payments device to make a purchase. NFC uses short-range, high-frequency wireless technology that allows for communication between a consumer's smart phone and the POS device at the merchant's counter. The telecom partners say that Isis is "being designed and built to include strong security and privacy safeguards."
According to an expert on payment security, the telcos have an advantage over the card networks and banks in working to develop a secure mobile phone payment system.
"The mobile carriers are in an excellent position to secure payments because of their strong relationships with the handset manufacturers," said Avivah Litan, vice president and distinguished analyst with Gartner Inc. "They can suggest the manufacturers install a chip in the phone that secures a payment. That makes (the phone) much more secure."
Isis has also created a website to market its service, www.paywithisis.com.
According to mythology Isis was a mother goddess of ancient Egypt, figuring in a number of stories, particularly in myths about rebirth and resurrection, according to the Myths Encyclopedia.
