My, how time flies when you are having fun in the digital wallet space!
Since we all had such a great time together reminiscing about Google Wallet last week, I thought it might be interesting to do the same about some of the other digital wallets in the market – there are so many now! Since someone was asking me just the other day about ISIS, and its been a while since we’ve heard from them, I was inspired. So, just Where in the Wallet World is ISIS these days?
Well, the short answer is … not in very many places.
It’s live in two cities, so they can officially use plural words when describing its deployment, but unless you live in Salt Lake City or Austin (and own particular handsets with NFC) you are SOL in being able to engage in the ISIS experience. According to Mike Abbott, ISIS CEO, at a presentation this past May, ISIS will expand past those cities when they are good and ready. And after all, what’s the rush, especially when you have Big Daddy Telebucks (AT&T, T-Mobile and Verizon) bankrolling you?
Let’s take a trip down memory lane now and refresh our collective memories on the ISIS Wallet evolution.
It seems like only yesterday – but it was actually November 2010 – when the news first broke that AT&T, T-Mobile and Verizon Wireless had formed a JV to build a “transformative” mobile commerce network called ISIS. The emphasis here is the word network. The original ISIS ambition was to create a mobile network to compete with V and MA and AXP, touting its ability to bring 200 million subscribers to the mobile commerce party, which the three founding telcos paid $100 Million to throw. The model was to have a single issuer, BarclayCard US, power the solution, which would run over Discover’s rails. This was all going to happen by way of NFC.
Fast forward to May 2011. After the initial heavily-funded-start-up-with-lofty-ambitions euphoria wore off, the reality began to set in. New network that competes with incumbents: hard. Mobile: hard. NFC-based: harder. No available NFC handsets: much harder. No merchants with NFC-enabled POS: much, much harder. Consumer adoption: yikes! They’d have to ditch their existing cards, which they could use everywhere, switch their accounts and get a Barclays Card, buy a new phone … only to not be able to use it many (any?) places. Not a very enticing value proposition – and many, many really hard platform business problems to solve all at once!
So, ISIS pivots, moving away from its network ambition to a mobile wallet ambition, now partnering with V and MA. The WSJ piece that broke the news that month cited its fear of falling behind other NFC rivals (if only they knew that no one was really ahead!). The notion was that by making this shift, consumers would be able to load any card of their choosing into their ISIS wallet, of course after their issuer had adopted the ISIS spec, and those consumers went out and bought a phone and went on an NFC scavenger hunt to find a place to use it. This is 2011, remember. Since today only about 2 percent of merchants have NFC, two years ago, there were even fewer, and even those were highly concentrated in key cities like Manhattan. The pivot from mobile network to mobile wallet solves one problem – but not THE problem needed to ignite ISIS. (My piece CRISIS at ISIS goes into my thinking at the time and all you ISIS history buffs can find it here.)
About a month later, in June of 2011, ISIS confirms that Austin, Texas would be “one of its initial launch markets” during the first half of 2012. Austin was chosen from a short list of 30 to 40 cities it had evaluated as pilot sites! The selection criteria included the “percentage of youthful residents, education levels and willingness to adopt new technologies early.” So, now we know three things: a pilot was still about a year away, cities with old fuddy-duddies as residents weren’t on the short list and having NFC enabled terminals in place wasn’t important.
Fast forward 10 more months and it’s now March 2012. Early in the month, ISIS lines up support from VeriFone and ViVOtech and Equinox to, as one publication termed it, “take over the world,” with each partner promising to provide hardware and software support on their POS devices. This is now 16 months after the initial announcement of the formation of the JV, about a year after VeriFone announced that 25 percent to 30 percent of all merchant terminals in the US would be NFC enabled (remember its at about 2 percent today, so …) and a year before ViVOtech filed for bankruptcy (ah, yes, the circle of life in NFC). And, later that month, ISIS officially “debuts” at SXSW where people can watch cards get loaded into the wallet and see a simulated merchant experience. Technically, there are still three more months until the first half of 2012 is officially over, but as yet no real clues about the real launch.
In between all of the announcement dry spells, two things are happening in the trade press:
Ta Dah! The next big announcement is in October of 2012, and the one we’ve all been waiting for! ISIS is live in two cities – Austin as promised and also Salt Lake – and available at … tens of merchants and … on as many as 11 handsets (20 they said by the end of the year)! According to people in the Austin market at least, it got off to a rocky start. The lack of handset availability was a problem and many of the participating stores apparently hadn’t received the memo that they were launch partners, since they didn’t seem prepared to accept ISIS transactions.
In January 2013, in an apparent effort to expand the number of handsets that could accommodate the ISIS wallet, it launched something called CashWrap at CES. I can’t believe I missed this, but maybe the lack of post-CES fanfare was by design. This device, which looks like a VHS tape box (check this link for all of you youngsters out there who have no idea what I am talking about) that you pay $60 or $70 to buy. And then put your lovely, sleek iPhone or Andriod device into and lug around to buy stuff at the one merchant in town that you may visit every six months. If you don’t believe me, take a look here.
A month later, in February of 2013, ISIS revealed that its average user in Salt Lake (no mention of how many of them there are) “pays for goods or services with the mobile wallet five times or more a week, follows five different merchants using the wallet’s loyalty card and coupon features, and visits that business twice as often as a regular customer.” I wonder what would happen to those numbers if the Utah Transit System, which supports NFC, was removed from the merchant mix?
ISIS also closed a deal whereby more than 7,500 USA Technology vending machines in both Austin and Salt Lake are enabled to take the ISIS wallet, in an apparent effort to turn those strong cravings for salty snacks into an enabling value proposition to adopt. (Little known fact – did you know that the first vending machine was developed by an engineer in the ancient city of Alexandria, who developed a machine that accepted a coin and dispensed holy water?)
And, just a month ago, in May 2013, ISIS’ Abbott gave a speech in which he told his audience that ISIS is about “making the world clickable,” how people want “magical” moments when shopping and “super easy” payments. And that to make it in payments, providers have to “get the simple things right” and “start with small things that can be done quickly and do them really well.” He also pointed out that all new terminals should be shipped with NFC before the end of the year.
I guess I’ll resist the natural temptation.
So where does ISIS go from here?
Well, I suppose it depends on how much longer Big Daddy Telebucks is willing to fund it.
People have said that nearly $500M has been poured into ISIS, probably making it something on the order of $10M for every ISIS customer (they’d much rather have the money)! To me, it seems hopeless. More than 2.5 years into the experiment, there is little traction, and not much of a value proposition to entice merchants or consumers or issuers to play along. And it’s not going to get better any time soon. Being totally tethered to NFC is a losing proposition, in at least the short run, and there are now too many other cloud-based schemes with momentum for them to compete with. If ISIS had one side of the platform getting any sort of traction, then maybe, maybe it would have a marginal shot, but its quest to solve the hardest problems in payments all at the same time – using NFC as its enabling platform – has resulted in a big mess of quicksand that even $500M more couldn’t get them out of. I take the point that this kind of money to the telcos is pocket change, but it’s also a resource distraction that multiplies their out-of-pocket investment by at least 5x. I would think that their patience would run out sooner or later.
So, I stand by my initial position of a couple of years back. In spite of its namesake, the goddess of fertility, I don’t see ISIS producing lots of mobile wallet offspring. I find it incredibly ironic that the two mobile wallets that pundits thought would change the world, ISIS and Google Wallet, just might after all, but not in the way that they would have wanted. Instead, they could lead the trend away from, and not towards, NFC-mobile wallet schemes. Focusing on the technology and the value created for mobile operators, and not the value created for consumers and merchants, turned out to be the wrong place to put the bet.
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