November 23, 2010

Formed through the partnership of three of the four largest mobile phone operators in the United States, the recently-announced Isis payment network could be the first successful attempt at getting domestic cell phone customers to ditch plastic and start paying with their phone.

At least that's what the people behind Isis hope. To get there, however, it will require the partnership of merchants and banks.

"At the end of the day Isis is infinitely more successful if we work in partnership with the nation’s banks," says Ryan Hughes, Isis spokesman and Verizon VP of business development. "The ideal situation from my perspective will be every bank in the country is issuing Isis accounts to their customers. For what it’s worth, we are also open to working with and want to work with the other mobile providers who were not part of the announcement."

Hughes says that, as competitors, Verizon, AT&T and T-Mobile were initially looking at building a mobile device-based payments network on their own. Through discussions with the merchant community, the competing carriers heard two messages: first, there was a resounding enthusiasm about payments going mobile, and second, that the merchants wanted a standardized payments network, rather than three disparate networks provided by each of the three carriers. Simultaneously, the large investment in hardware was something that was better shared among the providers, Hughes says.

"We’re seeing happen more and more around the globe is the recognition that working together is a faster way to stimulate the market," Hughes adds.

Another opportunity in the joint venture is the potential to scale. Hughes says the three combined carriers serve some 200 million-plus customers. With the average customer replacing their device every 18 months, Isis-enabled phones could be in the hands of millions of customers relatively quickly. The Near Field Communications standard Isis is built on means hardware manufacturers should easily be able to equip mobile phones with the necessary components to enable Isis payments.

"The device manufacturers as well as the component suppliers of the individual pieces of technology that go into the handsets, I think quite frankly have been waiting for the carriers to make the commitment on a broad scale for a long time," Hughes says. "This becomes that tipping point."

Built to be an open payments platform, Isis will utilize Discover's network.

"We’re leveraging Discover’s payment network, and it will be branded Isis, so Isis will be in effect the brand of mobile payments," Hughes says, adding that Isis plans on working with any and all merchants and banks.

Isis will bring a set of payments products to mobile devices, Hughes says: credit, debit and stored value. He says Isis has no plans to extend its services beyond that of a payments network.

"Our ambitions quite frankly don’t extend beyond this initiative as it relates to becoming a financial institution," Hughes says.