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Isis expands m-commerce network launch to Texas

June 22, 2011 — 10:01am ET | By Jason Ankeny

Isis, the mobile commerce joint venture spearheaded by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA, has identified Austin, Texas, as its second launch market. Beginning in the first half of 2012, Isis will roll out Near Field Communications-based contactless payment services to select merchant locations across the Austin community. In addition to point-of-sale purchases, the Isis network also will support retailer loyalty card programs, coupons and offers and related promotions.

Isis previously named Salt Lake City, Utah as its first U.S. launch market. The company said it will partner with the Austin Chamber of Commerce and local merchants to boost consumer adoption of m-commerce services. The famously progressive Austin community is home to a thriving technology startup culture; it's also the site of the University of Texas.

Verizon Wireless, AT&T and T-Mobile USA first announced Isis in late 2010. Isis initially stated it would roll out its own NFC-based network designed to go head-to-head with traditional credit card giants Visa and MasterCard, but in May, the firm said it will instead open its system to all interested credit issuers and banks and will align with existing m-payment infrastructure. Although Isis has long maintained plans to open its ranks to all merchants, banks and mobile carriers, the company said unexpectedly strong interest prompted the decision to accelerate the approach far earlier than anticipated.

In a May interview with Reuters, AT&T head of business solutions John Stankey said the Dodd-Frank financial reform law also played a significant role in the Isis overhaul. The law's "Durbin amendment" vows to make payment processing less profitable by limiting the fees that merchants pay banks and networks whenever a customer completes a purchase using a debit card.

"Some changes in the banking laws occurred with the amendments that were put in with the Dodd-Frank bill... As transaction fees were limited and things were changed, it kind of changed the [Isis] business model," Stankey said. He nevertheless reiterated that Isis planned all along to open its system to "all parties" over time, adding "Frankly, it just happened a little bit sooner than probably what we would have guessed."

Isis will face competition from rival initiatives including the new Google (NASDAQ:GOOG) Wallet, which aligns Google with U.S. network partner Sprint (NYSE:S) and financial services providers MasterCard, Citi and First Data to enable subscribers to purchase goods and redeem coupons and loyalty rewards via Android smartphones. Also a contender: Mobile payments solutions provider Square, which recently announced it now processes over $3 million in transactions a day. (The Square application relies on a smartphone dongle attachment, not NFC.)

Near Field Communications-based mobile transactions are expected to reach nearly $50 billion worldwide by 2014 according to a forecast issued earlier this month by Juniper Research. Based on internal analysis, as well as interviews with industry players, Juniper anticipates NFC-based mobile payment services will launch in up to 20 international markets over the next 18 months, with North America and Western Europe together accounting for 50 percent of the worldwide market by 2014.

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