Mobile Providers Form New Digital Wallet Venture
Three of the four largest mobile phone carriers in the U.S. have formed a joint venture to turn phones into digital wallets, allowing subscribers to pay for groceries and other retail items using their phones, instead of credit cards or other methods.
AT&T Mobility, Verizon Wireless and T-Mobile USA, with a combined 220 million U.S. customers, announced Tuesday that they have formed the Isis mobile commerce network, with service expected to roll out in some markets within 18 months. The network, based on open standards, will welcome any mobile carriers, banks and retail outlets that want to join, said Michael Abbott, Isis' CEO.
The goal of the new service is to "fundamentally transform" the way people shop and pay for items, said Abbott, a former chief marketing officer at GE Capital. Instead of fumbling for a credit card, coupons and loyalty card at a grocery store, a customer will be able to swipe their mobile phone to deliver all that information, he said. In return, stores can deliver coupons back to customers.
"We're painting a vision of the future; we're pulling this together," Abbott said. "It's all about simplifying the consumer's life."
Barclaycard US has signed on to issue credit accounts through Isis.
Isis will use (NFC) near-field communication technology, which allows wireless data exchange within about 4 inches of a phone and reader. NFC has been around since 2003, with the NFC Forum announced in March 2004, but the technology has been slow to catch on in the U.S.
The backing from Verizon, AT&T and T-Mobile will give the technology a critical mass that will encourage retailers to purchase NFC readers, Abbott said. The partnership "brings the scale the industry needs to drive the investment going forward," he said.
Several retailers have already signed on to Isis, although the names are not yet available, Abbott said.
In addition, Google CEO Eric Schmidt announced Monday that the next version of its Android mobile OS will support NFC, and Nokia has announced plans to integrate the technology into a number of its Symbian-based smartphones in 2011.
Apple also hired NFC expert Benjamin Vigier in August.
Asked about security of NFC, Abbott said it's "inherently" easier to secure private data on a phone than on a credit card. "It's locked down with a password and the number is encrypted inside the phone," he said. "It's not sitting out in raised numbers on a piece of plastic. Even beyond that, one call shuts [the Isis service] all down, and one call can restore it."