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US operators shelve banking plan for Isis

Isis will be a wallet, not a bank card

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US operators' initiative Isis won't be an NFC payment system as originally planned, just a wallet to hold payment cards and without a revenue stream to call its own.

The scaled-back plan will see Isis verifying payment applications from Visa, Mastercard and anyone else rather than creating anything new. That removes the need for an internationally recognised logo, but also takes away the revenue stream that was supposed to pay for the NFC handsets that everyone is being told they want.

Isis was set up last year, and backed by AT&T, T-Mobile, and Verizon, who had planned to create their own payment platform and logo for a proximity payment system base on Near Field Communications. The idea was to use terminals owned by the Discover Card to take the payments, and create a viable alternative to Visa or Mastercard.

But citing "people familiar with the matter" the Wall Street Journal reports that merchants didn't like the idea of a new player, and Isis has now downgraded its aspirations to acting as a gatekeeper verifying applications from those companies with whom it had planned to compete.

NFC payment systems are based on radio communications, and a secure element which can cryptographically verify transactions. The secure element has a single owner who holds the key; no payment application can be installed without approval by that owner. Isis has moved from providing the payment application to holding the keys to the secure element.

An important role certainly, though one slightly undermined by the decision of some handset manufacturers (such as Samsung) to provide multiple secure elements under the control of different bodies.

But it's also a role with no obvious revenue-generating potential, leaving operators to sketch out ideas for making money with coupons (as Google is planning) or charging payment applications rent for the privilege of being installed.

In Europe there's a trend for operators to launch payment systems first, with the intention of integrating into NFC handsets as an option. One can imagine getting a handset from O2 that was able to run Visa or Mastercard apps, but came pre-installed with O2 Money in the hope that few people would bother with optional downloads.

That might, or might not, work, but at least it's a plan with revenue-generation potential, which is more than the Americans now have. ®

The smart choice: opportunity from uncertainty

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