Just when it appeared that hype over mobile payments using NFC was over, the Isis consortium has announced it's finally going to take its pay-by-phone-tap system national, VentureBeat reported.
On July 30 the consortium announced it will go national by the end of 2013 after nine months of testing in two cities. No specific date was set. Isis also didn't release results of its tests, including how many people switched from using conventional credit cards to paying with a smartphone. It did say that two thirds of users chose to receive offers from brands, and more than 80 percent of payments occurred at locations like gas stations, convenience stores and coffee shops—and those who used the system averaged about ten payments per month. That's nowhere close to typical payment-card use.
Isis, which is backed by mobile operators Verizon, AT&T and T-Mobile, has been slow to get going. It spent the past three years putting the system together and testing it in Salt Lake City and Austin. Meanwhile, similar systems that use an NFC chip inside a smartphone that let it make contactless in-store payments have come and gone, including the highly touted Google Wallet.
The knock against NFC was that it only worked with a small number of phones. In practice, one of the biggest problems has been getting banks and mobile operators to cooperate. The three Isis partners refused to let Google Wallet be installed on their phones, so only Sprint phones could use that system, and banks that issued payment cards were slow to allow card information to be installed in a secure area of the phones.
Even then, the original idea behind smartphone payments—just pull out your phone and tap to pay—turned out to be impractical. To keep the phones secure, they needed to be unlocked using PINs before tapping to pay. Then they needed the ability to select among multiple cards. Eventually pay-by-tap became far more complicated than pulling out a cheap plastic card and swiping.
But that ten-payments-per-month detail highlights the biggest challenge that Isis faces: getting U.S. customers to use the system instead of a conventional payment card. In the U.S., even alternative plastic cards (such as chip-and-PIN and contactless) have made no headway against the inertia of mag-stripe cards. Based on the trials, there's no indication that Isis has solved that problem.
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