Amex Plays a Major Role in Revamped Isis Mobile Wallet

Don't get distracted by the big-name telecoms that designed the Isis mobile wallet, or you'll miss the wizard behind the curtain: American Express, which stands to see a jolt in adoption of its Serve account if Isis succeeds.

In the revamped Isis app launched this week, anyone without the proper JPMorgan Chase or Amex credit card must sign up for Amex's Serve digital wallet to make Isis payments. Isis at one time offered an Isis Cash virtual prepaid card to serve the same purpose, but Amex has completely taken over that role.

Today, "there is no Isis prepaid account. We are the prepaid account," says Stefan Happ, senior vice president and general manager of U.S. payment options for American Express.

For Amex, which overhauled its Serve digital wallet last month to make it a stronger competitor for prepaid cards, "Isis is a powerful distribution channel," Happ says. "We expect to get scale for Isis – and for American Express Serve within Isis – as part of Isis' nationwide rollout. The combination of Isis and Serve really turns an equation of two plus two into five, not four." 

Isis launched nationally after months of tests and years of development. Isis, which is operated by AT&T, Verizon Wireless and T-Mobile, announced in August that it would support a deeper integration of Serve into the Isis app.

Isis users can manage their Serve accounts entirely from within the Isis app. Serve customers who make tap and go payments through the Isis mobile wallet get a hefty 20% cash-back offer through Jan. 31, 2014. Isis did not respond to a request for comment by deadline.

"[The national rollout of Isis] is beneficial for Amex, but it's still too soon to know what the adoption of Isis will be," says James Wester, a research director for IDC Financial Insights. "But Amex gets to claim some credit for being 'innovative.' It has embraced everything from Foursquare to Twitter, so this helps to burnish that reputation."

American Express plans to allow its Serve wallet to be loaded by cash at CVS and 7-Eleven locations later this year. It's a move that can bolster use of both Serve and Isis, given the close ties between the two brands, Happ says.

"The cash-load piece is an additional capability that we are adding to Serve overall," Happ says, noting that CVS locations are largely NFC-enabled and can accept Isis payments. "American Express accepts all forms of tender, such as credit cards, cash checks, etc. It's a way for any inflows that the consumer chooses to make it into the Isis wallet." 

Serve can also function as a fallback option for Isis users wanting to make purchases at a merchant that cannot accept mobile payments, Happ says. "If you're an Isis user, you don't have to rely exclusively on NFC being available at the merchant. If that happens you can use Amex Serve," he says.

The flexibility in payment modes can be beneficial, says Ben Jackson, a senior analyst at Mercator Group.

"While there is a lot of contactless terminals deployed out there, the merchants—particularly their staffs—don't already realize that contactless is an option so they swipe anyway," Jackson says.

Serve's status as a prepaid account may also prove helpful to Isis in winning over consumers, Jackson says.

"People may be more willing to commit to a limited-risk payment tool than throwing their whole credit or debit card out there," Jackson says.

JPMorgan Chase, which is also participating in Isis' nationwide rollout, says it is not working with Isis on a prepaid product, though a question-and-answer page on Chase's website lists it as the issuer for the old Isis Cash account. A Chase representative would not discuss its mobile payments strategy, aside from affirming its ongoing participation in the Isis rollout.