Isis will compete with Google Wallet, the mobile payments platform supported by Google, Sprint, MasterCard, Citi and First Data.
The announcement doesn’t impact Google’s plans, the search giant said. “Mastercard is still a valuable partner to Google Wallet,” the company said in a statement.
Both systems will let people tap their phones against a reader in a retail store to pay for goods. The phones must have chips that support Near Field Communication (NFC), a standard technology that enables the transactions.
Isis was created by AT&T, T-Mobile and Verizon last year and was supported by Discover from the start.
“While Google Wallet has the backing of just one operator and one major credit card company, its relationship with First Data is significant,” said Bob Egan, analyst at the Sepharim Group. “One of the things that Google Wallet has going for it is the kind of traction that First Data has in acquiring merchants,” he said.
Still, neither group has an overall advantage, he said. “It’s a cat fight,” Egan said.
The mobile payments market has a number of hurdles to overcome before the technology is widely used. Currently there are almost no phones in the market capable of making payments using NFC technology. Plus, few merchants have readers in place.
“Ultimately, retailers are interested in NFC not as a way to speed payments at the till but as a way to engage with customers,” Egan said. Isis is working on kiosks where people would walk into a store and “check in” with their phone at the kiosk, the company said. The store can then check that person’s rewards programs and shopping habits to make relevant offers. Google Wallet similarly will be tied into a coupon program that could help retailers with customer engagement.
A lot of uncertainty remains, however. “I don’t think anyone knows how this is going to evolve, despite the outrageous forecasts,” Egan said, referring to predictions of widespread NFC use in just a few years. But Isis isn’t planning its first trial until next year, and Google has said its Wallet will launch sometime this summer, after trials in New York and San Francisco.