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Begun, the Mobile Payment Wars Have

By: 17 November 2010

A new consortium of mobile carriers has announced it will launch a mobile payments platform known as ISIS. With the tagline “Wallet … meet Phone,” it plans to launch in the next 18 months (really?).

The press release and Web site are rather vague about the technical details, timing, pricing and other things. For this reason, it’s hard to put any faith or real analysis behind this — it was more of a promotional announcement that something is coming (in mid-2012!).

That said, here’s what we do know: The technology will be based on near field communications (NFC). The consumer reach collectively accomplished by these carriers could also alleviate one of the major barriers to mobile communications: wide-scale consumer and merchant adoption.

The Gating Factor

This adoption and mobile payment technology in general will continue to stand as a gating factor to lots of parallel areas of mobile development. Once mobile payments reach a certain level of consumer ease and ubiquity, we’ll see the promise of mobile really start to come through.

In other words, mobile payments will unlock the potential around gaming, social media, location based services and all the other hot areas of mobile that we’re hearing so much about. This will happen by closing the loop on finished transactions for all kinds of product categories.

These include local commerce (where the majority of U.S. retail spending occurs) and everything from reserving a restaurant table to a flat screen TV. That finished transaction will appeal to marketers that want concrete ROI on their ad spends or mobile “presence.”

So, yes, carriers are in a good spot to do this because of existing customer billing relationships. The problem so far is that their exorbitant markups on mobile payments have all but debilitated consumer and merchant adoption. This has spurred a wave of start-ups like Boku and Square.

Adoption will happen, and it’s just a matter of time. But it will require lowered barriers including reasonable markups from intermediaries. It will also require the ease that comes with existing billing relationships such as carriers, credit card companies or others like PayPal.

Leave It to the Tech Giants

Developments on the technology side will also make mobile payments more appealing and easier to adopt, including NFC. Google CEO Eric Schmidt claimed this week that NFC is a big area of mobile development, which could add new dimensions to the company’s many mobile initiatives.

The other 800-pound gorilla here is of course Apple. And not just because of the iPhone and its position as a technological and cultural leader in the mobile space. Through iTunes, Apple has 150 million customers and billing relationships — again a major asset for mobile payments.

Viewed together, it’s hard to believe Apple will not do something big in mobile payments soon. Google too — and thus the beginnings of yet another point of friction between the two tech giants in the escalating battle for dominance in mobile.



One Comment

One Comment »

  • Brian Hayashi said:

    The mobile carriers have been dragging their feet on this for years. The carriers are incredibly slow to remit funds, and have arcane limits on the amount of money a third party can charge the customer. Not all carriers will support a greater than $9.99 price point.

    While Groupon is sometimes criticized for its near-usurious revenue share, it has set the gold standard by writing checks to its customers, quickly. In that way, Groupon is an updated version of bank factoring. If ISIS is to be competitive, it needs to dramatically rethink its approach to lockboxes.

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