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AT&T (s t), Verizon (s vz) and T-Mobile are reportedly poised to invest $100 million in their joint mobile payment venture called Isis, a near field communication-based contactless payment system that will do battle in the increasingly competitive mobile payments market. According to Bloomberg, the carriers are still determining exactly how much to invest based on Isis’ ability to obtain support from banks and merchants, but they could throw in a lot more money if the platform can gain momentum.
Isis will have to play catch-up with Google Wallet (s goog), the open NFC platform launched by Google, MasterCard (s ma) and Citibank(s c). That payment system was unveiled in May and is set to open to the public soon. Google Wallet lets people pay for things by waving their NFC-enabled Android phone at point-of-sale terminals that are equipped to handle MasterCard Paypass purchases. However, Google’s offering is limited right now to just the Nexus S from Sprint, and it hasn’t announced new credit card or banking partners beyond MasterCard and Citibank.
Isis, meanwhile, is backed by credit card companies MasterCard, Visa (s v), American Express (s axp) and Discover(s dfs). But the first trials won’t begin until next year in Salt Lake City and Austin, Texas. That will put it behind Google Wallet, though with few NFC-enabled devices available so far, it may not be that much of a disadvantage. But will consumers even embrace NFC payments on their handsets when the tech does become available? Questions about the security, reliability and fees of mobile payments still suggest that adoption will be slow, at least initially.
Google is trying to play up the openness of its platform, saying it welcomes all partners. Isis, however, has a lot of strong relationships with manufacturers, who can pre-install the Isis application right on their phones. Isis is hoping that this, along with the support of the credit card companies can help it become a universal digital wallet for all NFC payments.
For both Google Wallet and Isis, the key to attracting consumer attention appears to be in enabling digital offers and discounts via smartphone devices. Google isn’t taking a cut of transactions made through its service, and is looking to instead link up Google Wallet with its Google Offers program, with Google making money from offers made to consumers. Isis, too, is looking at making its digital wallet a platform for delivering targeted mobile offers to users based on their preferences and behavior.
Mobile payments are expected to be worth $670 billion by 2015, with one in five smartphones worldwide employing NFC-based mobile payment functions, according to Juniper Research. It’s a big market opportunity, and it appears the carriers understand that making money in NFC payments is going to require a significant pool of starting cash. You can hear more about mobile payments at GigaOM’s Mobilize Conference on Sept. 26 and 27 in San Francisco, where we’ll be discussing the issue during a panel called: Mobile Payments 2012: Will This Be the Year?