Capital One is dropping out of Isis’s mobile payments pilot project, according to a report from NFC World, casting a pall over the carrier-driven initiative to turn the mobile phone into a universal digital wallet.
Capital One told NFC World it’s pulling out because it has gotten the data it wanted from the trials, and it even held out the possibility of working with Isis again in the future. But its departure could mean that the banks are losing faith that Isis can really succeed with its nationwide launch of a near-field communications-powered mobile payments network. The pilot participants in Austin and Salt Lake City are the seed customer base for any future large-scale launch. It doesn’t make sense for Capital One to yank support for its credit and debit cards on Isis only to restore it later this year when the pilot goes nationwide.
Capital One was just one of the four financial institutions (the others are American Express, Chase and BarkleyCard) that signed onto the Isis trials in last year, so pilot participants still have other banking options when Capital One withdraws. But the initiative seems to have little momentum.
After delays, Isis launched its commercial trial in October, and this summer it finally revealed plans to expand nationwide by the end of the year. Meanwhile, the NFC chips critical to powering Isis transactions have made it into relatively few phones, and the mobile industry is looking for alternatives to NFC as a point-of-sale mobile payments technology. PayPal and Square don’t rely on NFC in their mobile wallets, while Apple has shunned the technology entirely. Instead it’s launched in iOS7 a feature called iBeacon, which uses Bluetooth Low Energy to power proximity-based transactions.
Google is still backing NFC, but its attempts to promote Google Wallet have been confounded by the Verizon Wireless, AT&T and T-Mobile — the carriers backing Isis. While Google this week announced support for Wallet features on all Android 2.3-or-higher phones, its core mobile payments service is still severely limited by the ban on competing NFC transactions from the Isis carriers.
Whatever potential NFC had as a financial transaction tool is dwindling quickly because of this war between industry heavyweights. Even though there are NFC phones in the market, it’s now nearly impossible to make a point-of-sale payment using one. Capital One could have decided it was time to withdraw its bet on what is clearly a losing horse.