Verizon, AT&T and T-Mobile will invest more than $100 million in their joint mobile payment venture, in a move to compete against a growing field of rivals in the emerging market.
The carriers may invest hundreds of millions of dollars in their Isis e-wallet initiative if it gains momentum with consumers. The amount of funding Isis gains from private investors depends on how successful it is at attracting banks and merchants, according to Bloomberg.
Formed last year by a consortium of wireless operators and credit card companies like Visa, MasterCard, Discover and American Express, Isis will let consumers make payments for goods and services at points-of-sale from their mobile phones, as well as receive and redeem coupons on their handsets. The service plans to make money by charging a fee for sending offers to consumers’ phones.
Isis, which uses near-field communications (NFC) technology, will debut in several cities next year.
“Isis remains on track to launch in key markets, including Salt Lake City and Austin, in early- to mid-2012,” said Jaymee Johnson, head of marketing for Isis, in a statement. Johnson declined to comment on funding, as did the carriers.
The service is stepping onstage as the mobile payments market begins to crowd with competitors, all aiming for a piece of a market that may reach $670 billion by 2015, according to Juniper Research, which also forecasts that mobile payments will generate $240 billion this year.
The carriers’ investment in Isis will help it catch up with rivals that have already rolled out services, such as Google with its E-Wallet service, which launched in May.
Beyond Google, companies like PayPal also have intentions to focus on mobile payments, and carriers themselves are partnering with financial companies in attempts to find a solution that takes off with consumers.
But despite the slate of options proliferating at a rapid pace, no one option has succeeded with consumers and businesses. Consumers have been slow to adopt, partly because few phones on the market have NFC capabilities. With the current patchwork of services and solutions, users may also prefer an insured, security-conscious industry standard when it comes to financial transactions on mobile phones.
A large investment in Isis, however, may leverage its potentially wide reach and help it become that standard tying together carriers, financial companies and merchants. Its wide ties to the major credit card companies are key and give it the ability to coordinate among a large swath of partners.
It also can take advantage of its carriers’ distribution networks and customer relationships, putting them in a favorite position to negotiate with phone makers who can preinstall Isis software on phones. Carriers may also negotiate with handset makers to adopt the software overall.
Isis may be in the foremost position to become an industry solution in spite of its competitors. Given their heavy investment, carriers likely regard the initiative as its best chance in beating off rivals, as well as opening a potentially lucrative new revenue stream.