Imminent Isis Launch a Test of NFC Tech's Long-Term Potential

For the past two years, the word "Isis" has meant a few different things for the payments industry.

Isis represented the first mobile payment joint venture created by U.S. telecommunications companies, as well as a potential flagship product to demonstrate the value of Near Field Communication technology. More recently, it has been a case study in the massive amount of work involved, and inevitable delays, in launching a new payments system.

But the meaning of Isis will come into much clearer focus Oct. 22, when the joint venture of AT&T Wireless, Verizon Wireless and T-Mobile USA will begin its much-publicized launch in Salt Lake City and Austin, Texas.

 Isis chief sales officer Jim Stapleton reportedly announced the launch date during the ETA Strategic Leadership Forum in Palm Beach, Fla., and Jaymee Johnson, head of marketing, notified media outlets Oct. 17 that as many as 20 Isis-enabled handsets are expected to be in market this year.

The official word confirms what many in the industry already knew when information about the launch date leaked out to media last week amidst speculation about whether the joint venture's recent delays were sending good or bad signals.

There also was little doubt that a delay in the Isis launch, originally scheduled for late summer, would linger much longer, considering the NFC-based system was being tested at restaurants located at venture partner Verizon Wireless' headquarters in Basking Ridge, N.J. earlier in the month.

Isis executives have publicly downplayed the product's competition with Google Wallet, another NFC-based mobile payment system.

Other mobile payment systems, such as SCVNGR's LevelUp and PayPal's digital wallet, consider NFC to be an optional component. Many, including Square's mobile wallet, the Starbucks card app and Apple's Passbook, are building a following without any NFC component at all.

Even though Isis seems to consider NFC an essential component, the Isis launch doesn't represent a do-or-die situation for NFC in the broader market, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.

"NFC is a technology, and if it is the best at something it will live on and find its place," Ablowitz says.

The fact that Isis says that 20 mobile phone handsets from the joint venture partners this year will be equipped with NFC is "a solid number," Ablowitz says. "That is something that should not be ignored," he adds.

Essentially, the launch has the potential to be a milestone for moving mobile payments forward, Ablowitz says.

"It is going to be very important to see what Isis does because it will teach [consumers and mobile payment developers] and it will potentially create a market," Ablowitz adds.

Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group, agrees that NFC likely doesn't face a crossroads with the Isis venture, but feels it is "do or die" for card emulation.

Card emulation represents a method in which a 16-digit card number is stored on the phone's secure element and sent via the NFC chip to an NFC-equipped terminal.

"Isis is the only major effort pursuing this model at the moment," Oglesby says. "If they gain significant momentum, then we could see a swing back into this direction."

Google Inc. recently announced it was moving storage of card data into a cloud-based server, rather than on the phone's secure element as it had previously. Google made the move to cloud security as a way to allow issuers and consumers alike to more quickly place virtual cards in the wallet.