Thin Isis

Isis was hoping to revolutionize the payments industry with a new payment brand backed by the three largest mobile carriers: Verizon Wireless, AT&T and T-Mobile. In yesterday's Wall Street Journal, we see the headline Pay-by-Phone Dialed Back --- Carriers Scrap Plans for Their Own Network, Look to Big Credit Card Companies. What happened?? According to the Journal, "The biggest U.S. wireless carriers are scaling back a joint venture for mobile payments that they originally hoped would compete with Visa Inc. and MasterCard Inc., reaffirming the traditional credit card companies' clout in the nascent market for mobile transactions." It would appear that we have a new thinner Isis. The United States has a number of very efficient and effective payment mechanisms, including credit cards on the American Express, Visa, and MasterCard networks. Debit cards can run on these networks as well as the ATM networks such as Star, NYCE, etc. Slower and cheaper still is ACH. The case for mobile NFC was always a bit shaky, as Celent discussed in the report, The View from the Mobile NFC Finish Line: Bank Economics in a Mature Mobile NFC Payments World, September 2009. As I mentioned in an earlier blog , the new Durbin regulations make a bad business case even worse. Isis has been having a serious rethink. While mPesa can work in Kenya, it can't work in most developed countries with well-developed payment infrastructure. The competition is just too great. Telcos will continue to do telecom, and banks will continue to do payments, especially in the developed world. In a future blog, I will discuss why we don't see many similar mPesa examples even in the developing world.