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The long awaited mobile payments service Isis is set to debut in September, according to a Bloomberg report. But it’s tough to muster much excitement when the core technology behind Isis, near-field communication (NFC), almost seems more like a fantasy today than when it was a hot mobile payments buzzword years ago.
Perhaps it’s because we’ve seen legitimate mobile payments solutions launch and thrive without NFC. Take Square’s mobile wallet app, which you can use to pay for purchases with your phone without the need for NFC hardware. Even PayPal has been exploring alternative methods of mobile payments with its point of sale solution.
Most damning for NFC are the major partnerships both Square and PayPal have recently landed. Square’s teaming up with Starbucks to entirely replace the coffee shop’s credit card processor, and its app will also work with existing Starbucks scanners at the register (again, no need for NFC). That deal also led Starbucks to invest $25 million in Square.
PayPal, meanwhile, just announced a partnership with Discover, which would bring PayPal payments to more than 7,000 Discover merchants in the U.S.
NFC received plenty of hype several years ago as the golden child of mobile payments, which led to the formation of Isis in late 2010. But since then more practical methods of paying with your phone have emerged, and at the same time, the impracticality of NFC became more evident (which likely had plenty to do with Isis’ delayed launch).
The hardware issue remains a problem for NFC: It requires special chips inside of mobile devices, which still aren’t nearly ubiquitous enough, and NFC readers at retailer registers.
Isis’ biggest competitor is Google Wallet, another NFC-based solution, which has failed to make a dent in the mobile payments arena. Google’s biggest problem is that it has only partnered with Sprint for Google Wallet — Isis has the advantage of being jointly owned by AT&T, Verizon, and T-Mobile.
Isis CEO Michael Abbott told us back in February that he doesn’t believe there’s a mobile wallet war, and he may just be right. There’s room for Isis to coexist among current mobile payment solutions, and it has a good shot of cementing itself as the leading NFC wallet thanks to its carrier connections. Juniper predicts NFC payments will hit $74 billion by 2015, so there’s good reason for Isis to stick it out, even if it doesn’t look like NFC is going to take off right away.
But now, more than ever, NFC mobile payments feel like an answer in search of a problem. Swiping credit cards isn’t exactly difficult for consumers, and it’s a system that we’ve come to understand. Swiping your phone doesn’t seem like a much more convenient alternative, and in many ways it could be more problematic for consumers.
Isis recently joined the newly formed Mobile Payments Committee, something that we’re hoping will give the industry some clearer direction.
There’s still plenty of room for mobile wallets to disrupt the way we pay — just look at the Pay with Square with app, which lets merchants charge you just based on your name and face. In many cases, you won’t even need to pull your phone out of your pocket.
That’s true innovation: something that makes life easier for consumers, merchants, and payment providers alike.
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