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A dust-up is brewing in mobile payments, pitting Isis against Best Buy, 7-Eleven

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Best Buy(s bby) and 7-Eleven have started shutting down near-field communications (NFC) capabilities in their stores’ point-of-sale terminals, making it even harder for Isis and Google(s goog) to get their fledgling smartphone payments services off the ground.

According to a report in ComputerWorld, payments technology analysts say Best Buy and 7-Eleven began disabling the NFC readers at their checkout stands simply because of the expense. NFC-powered mobile payments have barely cracked the surface in the U.S. – stymied in part by turf wars between Isis and Google – so big retailers see little reason to support it and other smart card technologies. Also, banks are charging higher transaction fees for smart card and NFC payments, giving retailers even less incentive to get behind smartphone payment services.

But there could be a third reason that Best Buy and 7-Eleven aren’t keen on NFC. They’re part of a consortium of big retailers called the Merchant Customer Exchange, or MCX, which is launching a competing mobile payments platform that relies on barcode readers, similar to the setup at Starbucks(s sbux).

Starbucks barcode-reading mobile transaction system (source: Starbucks)
Starbucks barcode-reading mobile transaction system (source: Starbucks)

If MCX’s big retailers – which include Target(s tgt), Walmart(s wmt), Sears(s shld) and CVS(s cvs) – wanted to put Isis and Google Wallet on ice while they prepped their own payments platform, flipping the NFC switch to off would be a good way to do it. Isis CTO Scott Mulloy didn’t go so far as to accuse MCX retailers of unfair play, but he did say they were harming the smartphone payments and smart card industries.

“A handful of retailers are moving counter to the broader industry movement towards more secure payment technologies,” Mulloy told ComputerWorld. “This affects millions of contactless [smartcards] already in circulation as well as new mobile wallet innovations. It’s a massive step backwards.”

Of course, you could make the exact same charge about Isis and its founding members Verizon(s vz), AT&T(s t) and T-Mobile(s tmus). While Isis spent years getting its act together, it fended off competition from Google(s goog) by simply banning Wallet from NFC transactions on their smartphones. Google finally got around it in its latest OS, KitKat, which allows mobile apps to bypass the secure element in Isis smartphones.

That spat, however, not only hindered Google Wallet’s traction, it probably set the already nascent smartphone payments industry a year or two back and slowed down the migration of NFC into handsets. If this to-do over NFC between Isis and Best Buy and 7-Eleven turns into a war with MCX, then it could be the final death blow for NFC payments in the U.S. The idea behind having smartphone wallet is that you can use it anywhere, and anywhere has to include at the checkout stands of the big retailers.

5 Responses to “A dust-up is brewing in mobile payments, pitting Isis against Best Buy, 7-Eleven”

  1. Karl J. Weaver 魏卡爾

    Hello Everyone,
    So here is the strange thing in Hong Kong 7 million transit pass owners buy things everyday in Seven-7 with NFC enabled Octopus Cards, and it’s same behavoir inTaiwan with Easy Card Corp (Youyou Ka). How can Seven-7 claim to not support NFC, when for credit/debit card, transit card or downloadable applicaiton for the NFC Smartphone handset payments, they are using NFC point-of-sales devices to process the transaction. However for the USA, they claim it’s not acceptable? They are be making lots of money in Asia, especially places like Hong Kong, Taiwan and Singapore, so it mystifies me? NFC is not going away, it’s growing. The problem is few people have the moral courage to state the obvious, MNOs, Banks and transportation companies in the USA are too greedy, not truthworthy, and want to control their fiefdom. They want to control but do not own the distribution of the Secure Element. Most European ad Asian countries have accepted the adoption of contactless NFC payments in places like Korea, Taiwan, Japan, Hong Kong, Singapore, China and just about most of Europe, Almost all countries in the World have adopted the EMV procotol, but not the USA. Smarter heads must prevail in this country only to improve the security by using EMV (Chip & Pin) with NFC for credit/debit card and mobile NFC payment success.

  2. They aren’t the only one. I asked cashiers at Natural Grocers, Origins, a local gas station, and a few other places…. they have already disabled the paypass/NFC stuff, or reported that they have seen maybe 2 people use it, ever. A Jack In The Box manager said that he saw a few people try and it almost always failed and they gave up on it.

    NFC, despite the claims from some others that say they use it all the time, has NOT caught on here in the US at all. And we have still further proof of it.

    It’s just a mess. A mess that Google happened to buy up a bunch of patents for….

  3. why are banks charging more for NFC & contactless payments to teh retailer in the USA? Surely its in the banks interest as they should have less fraud and the possibility of more volume.

    In the UK contactless & NFC payments are half the transaction cost than by Chip and Pin payments.