Venture Beat has good article on ISIS’ planned national launch later this year. My teleco friends tell me there will be $200M in advertising to support it (rumor is Sept/October).
As I was the first blogger to uncover this thing (4 years go Project Mercury and had many of the participants wrong), the initial 2008 supporters (Discover, Walmart) walked away from it in 2010 after ISIS switch from a retailer friendly model, to a bank/card model. Given its been over a year since my last ISIS post, thought I would continue to provide my perspective… (you get what you pay for).
After speaking directly to top 5 Bank CEOs, Card Heads, Top 10 Retailers, as well as mobile platform leaders…. My informed view is that MNOs are 2 years late to this game, have lost the opportunity, and may actually suffer significant negative consequences from this launch. Specifically this may be the event which creates a tipping point where MNO’s lock on phones (including subsidization) makes a big turn.
- Customer Behavior Barrier (see blog). Customer must buy new phone, obtain new SIM (GSM only), register payment instruments, change the way they pay physically, change the financial way they pay (no more debit)… each one of these is a show stopper.
- Where will I use it? Globally, it is well known that there are 3 areas which drive new payment type adoption: Grocery, Gas, Transit. Rumor is that ISIS may have gotten a big Gas win (?buying Exxon’s speedpass?) but given that top 20 retailers (corresponding to 60% of retail spend) have all said they will not support NFC consumers must still carry their physical card. See list of ISIS merchants (https://www.paywithisis.com/where-to-use.xhtml)
- My choice of payment? If the first 2 were not significant enough, there are no debit cards in the ISIS wallet. Most of the readers are probably points junkies like me and don’t understand mass market consumer behavior. Mass Consumers don’t use credit cards frequently, roughly 80% of credit cards have less than 5 transactions per month. This is why Banks were supporting ISIS.. to drive increased credit card usage. Of course this is also the reason merchants have refused to support it.
- WHY will I use it? What is the value proposition? to Consumer? How is it better than a plastic card? In the 7 pilots my teams have done globally (w/ Citi), we always see a novelty phase, where consumers want to use their new phones.. they see it works.. but it really isn’t any faster than physical card. I would be my britches that ISIS has seen this dynamic themselves in Austin and Salt Lake.. it is NOT something they will muscle through. Unfortunate they aren’t really discussing w/ they owners.
- Competition: Payment capability vs. New Platforms. As I wrote about yesterday, Apple and Google are making payment part of the OS. New phones from Apple and Google will not support SIM based SWP. In fact I believe Apple will embed SIM (taking away all carrier keys). We will see US MNOs launch w/ Windows phones and a few customized android handsets. MNOs are thus focusing a marketing effort around a “new” payment capability with “old” phones. SWP SIM, is not a “killer app”, particularly against a new Google XPhone or new iPhone
- Demographic/Audience. As tech leaders and gadget freaks buy the new iPhone and XPhone, MNOs will have a “unique” audience using ISIS, (perhaps teenagers for example). While vending machines and QSRs would step up to support this demographic, Nordstrom and Shell will not. There will be a reinforcing effect as network focused on delivering value (and retaining) current customers.
- MNO “leadership”. If you had the CEOs of Verizon, ATT and ISIS in a room and asked “who owns mobile advertising”?.. ISIS would say nothing if both of the other CEOs were in the room.. They want it.. but no one will give it to them as they can’t execute with what they have in this space. Verizon would say “many partners”… MNO preference would be to sell the platform akin to VZ’s $550M search sale to Microsoft in 2009. MNOs don’t want to run a business, they want to sell access (nodes). Their about to be disinter-mediated as the “nodes” move from subsidized/locked to Google/Apple.
- Bank support. All of the top bank issuers have given up on it.. Perhaps their marketing/PR teams will say differently, but the guys running the P&Ls have already written it off. The token efforts I’ve written about are very focused here.
- History. Look at every other NFC launch.. ISIS can see it in their own pilot… I was paying with Google wallet at the Duane Reed in front of Penn Station. There were 5 cash registers lined up.. 5 cashiers, one manager overseeing all of them. Manager asked me “is that Google wallet”? I said “yes, but you must see this all the time since NYC was launch market and Goog subsidized all your terminals”, He said ” only one I’ve seen for 2 months and I work here every day”. Enough said.