Isis Network Deals Pave the Way for Banks

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Isis, the wireless carrier-led mobile payments venture, just crossed off an integral item on its to-do list in signing Visa Inc., American Express Co. and MasterCard Inc.

Isis executives said Tuesday that its contractual agreements with the three networks will allow consumers to load their networks' payment cards into a mobile wallet application scheduled for field trials next year.

Specifically, Isis is licensing the networks' contactless payments specifications for use in its software. Isis initially had a relationship with Discover Financial Services as its only card network.

The deals with the other card brands "effectively lay the framework for any of the networks to get their cards, their payment applications, into the mobile wallet," Jaymee Johnson, the head of marketing for Isis, said in an interview on Tuesday.

However, Isis has yet to announce agreements with any card-issuing banks. This is another key item it will have to check off its list to accomplish widescale adoption.

Johnson said there are no agreements with banks to discuss on Tuesday but said Isis' relationships with card networks will help it attract additional partners.

"I think the important element is in having support of all four payment networks," Johnson said. "It really expands the potential pool of issuers that you can support and support very quickly."

Isis' executives said earlier this year it planned to work with additional partners. However, it departed from its initial plans in adding the other networks.

Isis is a joint venture of AT&T Inc., Deutsche Telekom AG's T-Mobile USA and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC. When the carriers unveiled Isis, they signaled intentions to create a separate network that would route transactions over Discover and rely on Barclaycard US, part of Barclays PLC, as an account issuer.

Isis is now working to create an open network that works with existing payment cards, Johnson said.

These moves could help Isis compete against Google Inc., which is testing its own mobile payment service in New York and San Francisco. Citigroup Inc., Sprint Nextel Corp. and MasterCard are partnering with Google on that service, Google Wallet, which is slated for commercial release this summer.

"Clearly the titans in the payment industry are getting ready for a gladiator-style battle here," said Richard Crone, the chief executive of payments consulting firm Crone Consulting LLC in San Carlos, Calif.

By collaborating with Isis, the payment networks potentially "thwart" the rise of other new mobile payment offerings that could pose competition to their individual mobile-payment services, Crone said.

"You might say this is a Barney [the dinosaur] release, 'I love you, you love me,' and that's very typically used by incumbent providers to freeze the market and buy time," Crone said.

Executives at Visa and MasterCard stressed their willingness to work with multiple wallet developers.

Asked whether MasterCard's involvement in Isis signaled less willingness to work with Google, Mung-Ki Woo, the Purchase, N.Y., payment network's group executive for mobile, said, "absolutely not."

"It's complementary," Woo said. MasterCard provides "a universal payments solution. Like today, we work with all banks, and working with one bank does not contradict the fact that we're working with another bank. Here we have a little bit of the same situation, which is, there is Google's project, and we love working with Google; and there is Isis' project, and we love working with Isis."

Nate Tyler, a spokesman for Google, said in an email that MasterCard is "still a valuable partner to Google Wallet. The variety of players in this market speaks to the promise of mobile wallets."

For Visa, Isis is another avenue for it to license its PayWave contactless technology, said Bill Gajda, the head of mobile innovation at the San Francisco payment network.

"Visa's perspective is we want to license the PayWave application as broadly as we can onto the wallets that are emerging," Gajda said.

Visa plans to continue supporting other mobile payments applications, including its own, he said. This fall it plans to roll out a mobile wallet that will help simplify the checkout process on e-commerce websites as well as allow consumers to make payments with a smartphone at the point of sale. That system uses a technology called near-field communication.

Isis agreements with the payment networks are necessary to make the telecom venture's mobile wallet service work. It will be tested next year in Austin, Texas, and Salt Lake City.

"This is more than just a symbolic pat on the back and it's more than a handshake," Johnson said. "It's a real framework to drive the industry forward."

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