Isis Promises iPhone, End-Of-Year Nationwide Launch

Mobile payments consortium Isis plans to expand its service throughout the U.S. by the end of 2013—and it will support the iPhone, the group said on Tuesday (July 30).

The consortium of Verizon, AT&T and T-Mobile has spent the last nine months testing its system in Salt Lake City, Utah, and Austin, Texas. Like Google Wallet, Isis uses mobile phones that contain a Near Field Communications (NFC) chip to let customers pay for merchandise by tapping their phone instead of swiping a credit or debit card. Retailers who participated in the Salt Lake and Austin tests include Macy's (NYSE:M), Dillard's (NYSE:DDS), Foot Locker (NYSE:FL), Aeropostale (NYSE:ARO) and Jamba Juice (NASDAQ:JMBA).

What's more interesting is that Isis now says it will also support Apple's (NASDAQ:AAPL) iPhone, along with BlackBerry and Windows phones, when it rolls the technology out nationally. That has led some to speculate either that Isis knows a soon-to-arrive iPhone will have an NFC chip or that Isis will use a non-NFC technology when it launches.

But neither is necessarily the case. Isis already supports the iPhone by use of a special case that includes an NFC chip. There's no indication that Isis has any plans to use an untested system after carefully testing its NFC approach for most of a year.

Isis also hasn't reported how much use its payments system has generated during the tests, which were originally intended to include more retail locations but had to be scaled back after not enough retailers signed up. The consortium also has a record of missing its own deadlines, so the fact that Isis hasn't set a firm date suggests its end-of-year launch is a soft target. Isis executives continue to insist that they're in no rush.

They have reason to take their time—Isis hasn't been able to generate demand for their system among stores or customers any more successfully than PayPal (NASDAQ:EBAY) or Google (NASDAQ:GOOG) have with their phone-based payment systems, and the lack of a compelling reason for merchants to sign on makes it a hard sell. Like PayPal's and Google's systems, Isis transactions don't cut the interchange cost to a retailer.

The only mobile payment system so far to create big volume in the U.S. is that of Starbucks (NASDAQ:SBUX), which uses an on-screen bar code instead of a special chip. Starbucks says the system, which can only be used in its stores, now accounts for 10 percent of its payment volume.

But Isis may face a more threatening competitor soon. Walmart (NYSE:WMT) is spearheading an effort to launch an alternative payment system called MCX that doesn't use NFC but is designed to cut out interchange fees for at least some transactions. If Isis doesn't get a foothold before MCX, and MCX is successful—admittedly a lot of ifs, even with Walmart involved—Isis's patience may cost it the whole game.

For more:

- See this Bloomberg story
- See this Isis news release

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