Is This a Turning Point for Mobile-Wallet Payments?

The Isis mobile-wallet system has been around for years, but consumers have hardly noticed. That might be about to change. This week looks like a serious turning point for the stalled idea of mobile-wallet payments.

Isis was started by three of the nation's four largest mobile networks, including Dow (DJINDICES: ^DJI  ) members and industry giants AT&T (NYSE: T  ) and Verizon. The idea is to let your near-field- communication-equipped phone stand in for your credit card, cutting down on wallet shuffling at the checkout counter. In the long run, purses and leather wallets might go out of style entirely if we move every function of cash and plastic into the mobile devices in your other pocket.

Will this smartphone app replace the plastic in your wallet? Image credit: Google Play.

But users needed to pair their Isis-enabled smartphones with a supported credit card from Barclays, CapitalOne, or Discover, which limited the service's success. These are hardly market leaders in America.

But in the last couple of days, two more Dow members raced to Isis' rescue. This time, it was financial powerhouses American Express (NYSE: AXP  ) and JPMorgan Chase (NYSE: JPM  ) , both of which added Isis support to some of their most popular consumer credit cards.

Chase and American Express handle orders of magnitude more card transactions than the other alternatives, so this is a major breakthrough. It's also tied to a national rollout, replacing the regional test markets where Isis has been available so far.

Is this the push that brings mobile wallets into the mainstream? Well, it takes more than just some big-name support from the banking and carrier sides. You also need a handset with near field communication, or NFC, to transmit the payment data to the checkout systems.

So far, that leaves Apple (NASDAQ: AAPL  ) out of the equation. NFC circuitry has not yet been added to iPhones, and the limited success of mobile wallets so far kind of justifies Apple's decision. There are several nationwide NFC-based payment systems in use today, but there are no huge success stories to share. For example, Google is cutting features off its Google Wallet service, and that mobile-wallet system might not survive Big G's next spring cleaning.

But it's also a chicken-and-egg problem: Would mobile wallet services like Isis suddenly explode if Cupertino baked NFC chips into iPhones? If the upcoming iPhone 5S adds NFC chips later this year, we'll get a real-world test of that theory.

And maybe we just love our plastic cards and leather wallets too much to ever leave the wallet at home. With the heft and brand recognition of four Dow components behind it, Isis is about to challenge the old swipe-and-sign model in the real world.

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  • Report this Comment On August 13, 2013, at 3:27 PM, PEStudent wrote:

    "The idea is to let your near-field- communication-equipped phone stand in for your credit card, cutting down on wallet shuffling at the checkout counter. In the long run, purses and leather wallets might go out of style entirely if we move every function of cash and plastic into the mobile devices in your other pocket."

    My concern is that thieves will simply walk past you as you're checking out and steal the information your phone is broadcasting.

    I'd rather reach into my wallet (which has a dozen convenient credit-card slots for loyalty cards, credit cards, etc.) and swipe it.

    And if America does what the advanced nations are doing, the cards will be more secure: it's getting to the point where America's antique cards don't work at many automated sites in Europe.

  • Report this Comment On August 13, 2013, at 6:20 PM, SunDevilDon wrote:

    I'm afraid I don't understand quite how these mobile wallets work. Google claims they don't share the credit card info with any merchant.

    "Google Wallet never shares the credit and debit card info you store in your Wallet with any merchant online or offline. No one should have access to that information, except you."

    Yet I presume they do charge the merchant all the transaction fees from the credit card. My guess (and only a guess) is they connect the merchant's bank with the purchaser's credit card account under the covers.

    http://www.google.com/wallet/stay-safe/

  • Report this Comment On August 13, 2013, at 9:03 PM, ahberry wrote:

    I think it's interesting that so many people see NFC as the future in mobile payments. I recently came back from Hong Kong where they have the octopus card. With that you can use NFC purchasing subway tickets, items at 7 eleven and a number of restaurants include this in their service.

    To me NFC shouldn't be the future of mobile wallets but it should be Bluetooth beacons.

    Apple announced that ios7 will offer ibeacon this technology allows phones to interact with low cost beacons within 150m. Of course there are security issues that will need to be dealt with but wouldn't it be nice to sit at a restaurant and pay using your phone without getting up?

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