On May 4, 2011, news articles indicated that the JV that was started by AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile will be scaling back their efforts around mobile payments with a less aggressive approach to the market. This should not be a surprise given customer behaviors and market dynamics.
ISIS (NASDAQ:ISIS)’s strategy to date has not been well-defined publicly. Many believed that the three MNOs were teaming up to create a new mobile payments rail, but their announcements with Discover and Barclays (NYSE:BCS) suggested that they would be riding the “4th” rail in the US market and teaming with Barclays for issuance. While this approach made sense for trailing Discover to try to gain some market share, the question remained how the least adopted rail by merchants would overcome adoption hurdles it has had in the past and what additional value the MNOs would bring to the table… both for the merchants and the consumers.
Given all this, today’s announcement of the “scale back” to be simply a mobile wallet that holds existing cards of the consumers is not a surprise. However, the question still remains what additional value add ISIS will bring to merchants and consumers. Meanwhile, other very disruptive partnerships are being put into place. It will not be surprising if new announcements are made in the very near future that could create a further setback for the ISIS efforts.
Former Director of Mobile Payments, PayPal
CEO, mPay Connect – a mobile payments consulting service