Almost a year ago, the telecommunications companies backing the Isis mobile wallet venture were clear that they would rely on Near Field Communication. But as technology advances, there may be wisdom in adopting an alternative.
Payments technology has changed rapidly in the past year, raising questions about which way mobile initiatives like Isis, with so much money at stake and so many supporters involved, should lean.
It remains possible that the Isis telcos — AT&T Mobility, T-Mobile USA, Verizon Wireless — would devote some resources to studying and developing a technology other than NFC, says Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm.
"There are a lot of competing technologies out there and it is making those at the financial institutions scratch their heads about what they should invest in," Arminio says.
PayPal, a unit of eBay, has been in particular been a disruptor. Its point of sale payment system relies on mobile phone numbers to access accounts — but it doesn't rely on the phone itself. Similarly, Apple's preview of its Passbook wallet didn't even hint at the presence of NFC in the next iPhone.
"The payments environment has developed very quickly around them, especially with [the PayPal digital wallet] and the Apple Passbook coming," says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.
"There is a lot going on right now," he says.
Isis, announced in November of 2011, has secured various banks and merchants as supporters.
Even with that momentum, industry observers are not ready to declare any particular mobile wallet venture a clear winner. Some openly voiced their skepticism of such technologies.
Isis spokesman Tom Cook declined to say whether the telcos involved in Isis are considering a technology other than NFC. He did, however, confirm that the mobile commerce project is on target to conduct testing on the transportation system in Salt Lake City, Utah and Austin, Texas this summer.
A prominent alternative to NFC is the virtual 2-D barcode, which Starbucks Corp. uses for the mobile version of its closed-loop coffee card.
The technology behind the Starbucks mobile payment system could easily "leapfrog NFC and become the technology embedded in our phones," Arminio says.
Though not identical to Starbucks' system, Burger King Corp. has begun using a virtual prepaid mobile payment system at its restaurants in and around Salt Lake City, Utah.
There has been more media hype than pragmatic use for NFC, Arminio says. "It may help with the speed of checkout, but it hasn't proven to be something consumers view as essential," she says.