Isis, Google Wallet Polish Their Approach to Mobile Payments

Isis and Google have been very publicly testing their mobile wallets, exposing the developing technology to harsh scrutiny, and both companies say their hardships are about to pay off.

Isis, a venture of AT&T, Verizon Wireless and T-Mobile, promises an imminent nationwide launch for the Near Field Communication-based mobile wallet it has tested in two cities for just over a year. And Google has substantially redesigned its mobile payment app to place a fresh emphasis on offers, loyalty and person-to-person payments.

"Merchants should prepare now because everyone will be using phones and tablets to make payments," says Pali Bhat, product lead for merchant and developer payments at Google. Mobile commerce may be off to a slow start, but it will be a "tsunami in the future," Bhat says.

In a survey of 1,500 smartphone users, Google learned that 90% used the phones for pre-shopping activities, such as comparison shopping, while 84% used them in the store as a self-help mechanism. When it came time to pay, however, 45% said they wanted a loyalty card on their mobile device, but only 4% had one.

"This is the post-purchase gap," Bhat says. In response, Google changed its technology to allow wallet users to add their own cards. More than 200,000 payment cards have been added to the revised Google Wallet, with half of those being loyalty cards, Bhat says.

Bhat and other execs presented at the Ramp conference in Chicago on Oct. 29.

Whereas Google has found the need to make multiple revisions to its approach, Isis says its problems have so far been tied to scale. As it prepares for a national launch in the coming weeks, two of Isis' four test issuers have chosen to sit on the sidelines for the next phase.

"A two-city test was not enough ROI for banks that didn't want to invest in a pilot, but a national launch will be enough," said Jim Stapleton, chief sales officer for Isis. JPMorgan Chase and American Express have committed to or deepened their relationship with Isis.

Isis is planning to launch nationwide ahead of the holiday season, and "bank interest is strong because they know it will still be their cards used at the point of sale," Stapleton says. Isis has already begun a marketing campaign with McDonald's in its test cities.

Ernie Harker, an executive at the Maverik convenience store chain in the western U.S., says his company went to Isis because of its ability to easily add the company's loyalty card to the wallet.

"People are in love with their smartphones, and that is the existing mindspace of our customers," Harker says. "Our question was, how could we get them to love Maverik in the same way?"

Maverik chose to work with Isis because the company understands that wallets eventually are going to be mobile, Harker says. The company also wanted to be able to accept any type of payment the customer wanted, he adds.

"But we wanted to streamline the loyalty program and payment transactions," Harker says.

Google is still working to add third-party acceptance, Bhat says, as indicated by the company's recent launch of an iPhone version of the Google Wallet app, which has long been an Android exclusive. The company also wants merchants to make the "loop" with their ads from the online and physical worlds to provide meaningful data for both settings, he adds.

Both companies' mobile apps allow NFC-equipped smartphones to make contactless payments at the point of sale. Isis' software allows card issuers to place their own mobile-payment widgets within its app, whereas Google Wallet's approach emphasizes a lighter, cloud-based integration. Google shifted to a lightweight integration last year after its initial approach failed to attract more than one issuer, Citigroup, which enrolled ahead of Google Wallet's launch.