The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
Will NFC payments find acceptance in Utah?
Isis joint venture to work with Salt Lake City merchants on contactless payments.
Managing Editor, International Research
Topics: Android, Apple, Apple Inc., AT&T Mobility, contactless, contactless chip, contactless payments, Contactless smart card, Gingerbread, Google Inc., iPhone, Isis, Kony Solutions, m-commerce, Mobile, mobile commerce, Near Field Communication, NFC, NFC chip, T-Mobile USA, Utah Transit Authority, Verizon Wireless
There’s a lot of talk about the possibility of consumers paying with their mobile phones, communicating with payment terminals using the wireless technology known as Near Field Communication, or NFC. A coalition of three of the largest U.S. wireless carriers is getting ready to test out the concept.
Isis, the NFC-focused mobile commerce joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, has signed an agreement with the Utah Transit Authority to allow passengers to pay for fares with their phones using Isis. Isis also says it will pilot its mobile commerce program with merchants in Salt Lake City starting next year.
NFC is a wireless technology that enables devices to exchange information over a short distance, including encrypted payment card data. For example, consumers could use NFC to pay for goods in stores with their phones or tap a card on a special terminal to pay for a subway ride. Putting an NFC chip into a mobile phone bridges the gap between the mobile phone network—with its connections to the Internet—and physical world devices, such as payment terminals and advertisements.
“We are pleased Isis mobile payments will be available throughout the Salt Lake City area starting with the relationship with UTA, and we look forward to many other merchants throughout the county offering this exciting mobile commerce service,” says Peter Corroon, Salt Lake County mayor.
Isis, which launched in November, generated much buzz as an NFC-based payment system that might finally gain traction in the U.S. after years of discussion about the wireless technology. NFC is used to a degree in Japan and Europe, and Isis plans to expand it in the U.S., but may face an uphill battle. Despite the technology being around for years, NFC has yet to take off in North America with consumers, the banks that issue credit and debit cards, or merchants.
However, consumers in such major cities as Washington and Chicago are accustomed to paying transit fares with a tap of a plastic card, using contactless smart card technology that provides the underpinnings for NFC. The Utah Transit Authority offers this as well, and soon, consumers will be able tap an Isis-enabled mobile phone to pay.
“Partnering with Isis is a critical step forward in widespread mobile contactless acceptance throughout the Salt Lake City area,” says Michael Allegra, general manager at Utah Transit Authority. “Isis allows us to build upon our existing ‘tap on, tap off’ system, and provide our customers with a new, more convenient way to use public transportation using only a mobile phone.”
Observers say Isis offers more hope for success than other NFC programs because it is backed by three wireless carriers that collectively provide services to more than 200 million consumers. Isis also said in its announcement it is investing in infrastructure to enable m-commerce nationwide and to make Isis available to all merchants, banks, payment networks and mobile carriers.
For merchants, the cost of deploying the special contactless terminals needed to accept Isis NFC payments remains a big obstacle. Merchants have taken a wait-and-see attitude because banks haven’t issued pay-with-a-wave NFC cards in large numbers as they are much more expensive to produce than magnetic-stripe cards. And where they have been issued, consumers have shown little interest. David Eads, director of product marketing for mobile app platform developer Kony Solutions, estimates there are some 750,000 contactless payments terminals in the U.S. today.
A good sign for Isis and NFC payments in general is that the newest version of Google Inc.’s Android mobile operating system, Gingerbread, is designed to work with NFC technology. Google, however, has not touted payments with NFC in Gingerbread, instead focusing on how the technology could be used to interact with items such as stickers, movie posters and T-shirts. For instance, a consumer could wave her phone near a movie sticker with an embedded NFC chip to see a schedule of upcoming showings or to download a discount coupon.
Several reports and industry experts also say Apple is working on adding NFC mobile payment capabilities to the forthcoming iPhone 5.