At first, Google seemed to have all of the necessary ingredients for a mobile wallet and Isis had the uphill climb of convincing banks to agree to a system designed by a group of telcos. But a year after Google Wallet's launch, it seems that Isis has the lead, with several top banks firmly behind it.

Google Wallet came to the point of sale with just one carrier and one bank signed on, and in the year that followed it made more headlines for its security snafus than for its progress. A spokesman declined to say how many consumers regularly use Google Wallet, and Google has still not publicly disclosed any bank or carrier participants beyond its launch partners, Citigroup and Sprint.

"This is not something that will happen overnight, but we are working hard to develop the technology and partnerships needed to make mobile payments successful," Nate Tyler, the Google spokesman, says.

By contrast, the likes of JPMorgan Chase, Capital One, American Express and Barclays have already elected to participate in Isis, which allows banks to retain strong control over their unique offerings within the digital wallet. Though Isis hasn't yet rolled out its product to all consumers, it has the backing of Verizon Wireless, AT&T Mobility and T-Mobile, guaranteeing the mobile wallet a place on their networks.

But the race is far from over — and there are well-known precedents of mobile payments providers winning over numerous banks, merchants and consumers only to see it all crumble.

"Isis has lots of fanfare, but there is too much optimism around it," Brian Riley, senior research director with TowerGroup, said in an interview. "It's in danger of becoming the next Bling [Nation]," he says, referring to a prominent mobile-payment provider that folded a year ago.

Many banks and merchants spoke highly of Bling Nation's product, which allowed consumers to make contactless purchases with any phone by adhering a payment-capable sticker to it. Merchants paid lower rates for Bling Nation sales, and consumers received an instant digital receipt sent as a text message.

But when Bling Nation began pushing a loyalty program on its merchant partners, those partners pushed back.

"It was either you're on or you're off, and a lot of our merchants said, 'Okay, we're off,' " said Brad Rose, the vice president of information technology security at State Bank in La Junta, Colo., in an interview last year. State Bank was Bling Nation's first bank partner.

Though Isis takes a different approach, relying on embedded Near Field Communication chips instead of stickers, it faces many of the same risks, Riley says. "While Bling had a very interesting business model, it couldn't pay for itself, and that is the problem Isis must conquer," he says.

This summer's Isis test may go a long way toward overcoming the venture's next hurdle: proving its appeal to merchants and consumers.

"Isis is building an open and comprehensive mobile commerce platform, bringing together the merchants, banks and brands consumers know and trust," says Jaymee Johnson, Isis' head of marketing.

Isis is working with merchants locally in its test cities, Austin and Salt Lake City, as well as with national retailers like Aeropostale, Foot Locker, Jamba Juice and Macy's, he says. 

"At launch, consumers will be able to pay with their phones at hundreds of locations across each city," he says.

Others are less certain of the appeal of either mobile wallet provider.

"The reality is that consumers and merchants haven't spoken yet about their preferences," Paul Grill, a partner with First Annapolis Consulting, says. "Isis is betting on Near Field Communication, but there will be plenty of other options emerging over the next couple of years before we know … what catches on."

Google is making improvements to its mobile wallet, such as its recent update to its pricing for online purchases.

"We are very excited about the progress we have made to date," Google's Tyler said.

Even if Google can't attract more carrier and bank partners, "the Google name has a much better shot at success at winning with consumers than Isis does," Mary Monahan, executive vice president and research director at Javelin Strategy & Research.

Google also has deep pockets and "a long view" on mobile payments, Monahan says. Google has already proven its patience with its Checkout, an e-commerce payment system Google kept active for years after experts declared the product doomed.

The decision to continue its support for Checkout paid off when Google absorbed Checkout into Wallet, giving the mobile wallet an instant boost to its userbase. That move also gave Wallet access to the other parties involved with Checkout.

"By incorporating Google Checkout into Google Wallet, the company may have found a way of bringing in the payment card networks, which would be a back-door route to getting broader coverage and acceptance," Monahan says.

But back-door moves won't overcome the overt resistance Google faces. In particular, Verizon has sought to block Google Wallet from operating on its network, citing security concerns.

Google's biggest strength is its expertise in advertising, Rick Oglesby, a senior analyst with Aite Group, says. Most mobile wallet initiatives expect to make money by using smartphone technology to make targeted offers to consumers.

"Google is so advanced in using consumer data to drive advertising, and it has a big lead on banks in using that data in social media and other channels, that Google Wallet stands to do a much better job of combining its resources to make the most relevant offers to merchants," Oglesby says.

Google and Isis face threats from other companies as well. Square Inc., the maker of a popular mobile card reader, supports its own mobile wallet, which it calls Pay with Square. There are also newcomers, like Lemon Inc. and PaidPiper Inc., which place less emphasis on the payment and more emphasis on how to use mobile technology to improve the experience for consumers.

And Apple Inc. overshadows everything. Its recently announced Passbook app seems to fall short of what Google, Isis and others allow in mobile payments, but Apple has repeatedly demonstrated its ability to destroy the leaders in any industry it enters. The most striking example may be BlackBerry maker Research in Motion, which is reporting increasingly grim financial performance just five years after the iPhone's launch.  

"While everyone has been hearing rumors about Apple doing its own digital wallet for so long that we have almost given up on it, the fact remains that Apple has the chops and the clout to come out with a digital wallet that would have a big impact," Monahan says. "The question is who has enough control to get its wallet on the most devices, and much will play out before we know that."

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