Field notes from the Isis Pilot

Nearly three years since rumors began to swirl that the major mobile network operators (MNOs) sought to provide NFC payments, the Isis mobile wallet finally launched in late October 2012.  While the initial rollout is focused on only two cities (Austin, TX and Salt Lake City, UT) and handset availability and merchant acceptance are still limited, Isis’s market entry is a milestone in the evolution of mobile payments.  First Annapolis has been tracking the Isis launch (primarily in Austin) and testing the wallet, and below we provide our observations to-date.

Availability & Advertising

The starting point for downloading and using the Isis wallet is a NFC-enabled handset.  The three Isis carriers (AT&T, Verizon, and T-Mobile) currently offer 18 compatible handsets.  The only overlaps among all three carriers are the popular Samsung Galaxy S III smartphone and Samsung Galaxy Note II, but each MNO enables at least four NFC-capable android devices, which they list on their websites and label in their retail stores.  Apple’s iPhone is one of the major handset models that does not have NFC integrated, although NFC cases and an iOS version of the wallet software are being developed.

An Isis-compatible payment account is the next requirement for the wallet.  Chase, Capital One, and American Express are all promoted on the Isis website as eligible credit issuing partners, and each bank has designed a unique application to load and manage cards through the mobile wallet.  American Express provides the widest range of card eligibility, with all personal and small business cards accessible through the wallet.  Chase enables four bank-branded card products (Freedom, Sapphire, Slate, and JPM Palladium), but Capital One has not yet publicized its eligible cards.  Barclaycard was originally announced as an additional issuing partner, but is not yet enabled in the wallet.  For consumers who do not have one of the eligible credit products, an Isis Cash prepaid product (issued by Chase) is available in every wallet and preloaded with $10.

Isis should be available to use at any NFC accepting merchant, and on its website, Isis currently lists over 1,400 contactless payment acceptance locations in the two launch markets.  However, Isis has also worked to promote new NFC enablement, enlist merchants to provide offers via the Isis wallet, and to promote the Isis brand at the POS.  As a result of these efforts, Isis has formed more significant relationships with at least seven national retailers and 50 local merchants in the two launch markets.  Several of the national merchant partners (including Macy’s, Champs Sports, and Foot Locker) are also promotional partners of other mobile wallet initiatives, while some of the local partners (including the SLC public transit authority) enhanced their existing contactless payment systems to support Isis.  Department stores and specialty retail/ apparel shops are the most common merchant categories, and an analysis of the Isis test markets in late 2012 indicated that over 40% of likely card accepting merchant locations in these categories within the two launch cities are capable of accepting contactless payments.

Isis conducted a wide-ranging marketing campaign in the Salt Lake City and Austin markets that included television, newspaper, and billboard advertisements.  Merchant promotion typically remains limited to window stickers or POS terminal logos at promotional partner locations, but some retailers who have integrated Isis marketing offers have installed additional signage about the service.  The three carriers promote Isis heavily in their retail stores, including posters, training terminals, and handset labels for wallet-enabled models, and each MNO has a webpage dedicated to Isis information and FAQs.

Wallet Enablement & Usage Experience

In order to use the wallet, customers must not only obtain an eligible NFC handset, but also upgrade the internal SIM to an Isis-ready version.  Most of Isis’s promotion directs consumers to these retail locations for information, and associates are trained to support customers with the wallet enablement process.  Once the correct hardware has been obtained, the consumer must download the wallet application from Google Play.  The wallet app confirms that the hardware requirements are met prior to installation.

A relatively straightforward sign-up process follows where users agree to the wallet’s terms of service, establish a four digit PIN, and await text message confirmation that the wallet has set up the handset’s secure element.  To complete set-up at first login, the user may need to turn on the phone’s NFC capability if it is not already enabled.  In our testing, the wallet set-up process required about 5 minutes to complete.
Once a consumer is logged into the wallet for the first time, they can enable Isis Cash, add an eligible credit card, and set up offers.  Isis Cash (issued by Chase) is a prepaid account that comes preloaded with $10.  Adding funds to the account requires upgrading to a reloadable account by agreeing to additional disclosures and providing personal information.  This process takes just a few minutes, although confirmation of the upgrade may take 24 hours.  Users are provided an additional $15 for upgrading.

Consumers load credit accounts in the mobile wallet using a unique process for each issuer.  American Express requires logging into an established online account to select the appropriate card, while Chase allows users to load accounts entirely in-app.  Both issuers use a multi-step verification process for loading, including an authorization request sent directly to a previously established primary phone number or email address on file with the bank.  While the verification steps may seem excessive, wait times to receive codes via text and email were typically only about 10-30 seconds.

Once the wallet and payment products are set-up, a consumer can begin to complete transactions by activating one of the “READY TO PAY” buttons that appears over the loaded payment accounts.  Once activated, the button turns green and a NFC radio wave symbol appears on the phone’s status bar.  The wallet can be active even with another application in the foreground, but variable timeout settings ensure that payments can’t be made after periods of inactivity.  When the POS requests payment, the phone must be moved close to the surface of a NFC enabled terminal.  Assuming the transaction is successful, the NFC terminal may beep and/or a series of green LEDs may illuminate.  Simultaneously, the wallet will display confirmation that the payment is being made with the selected product.  

In our testing, unlocking the wallet and waving/ tapping the phone elicited a transaction confirmation from both the terminal and the phone just about as quickly as fetching and swiping a card.  On some occasions, it took an extra few seconds to receive an acknowledgement from the terminal, but it was unclear if this was a result of the NFC interface or a little too much waving and tapping on our part.  While most transactions (including a split tender purchase with both the Cash Card and Amex) worked well, a handful (mostly outside the pilot cities) were not completed successfully.  In these scenarios the phone indicated that a transaction had been sent, but neither the NFC receiver nor the POS system acknowledged receipt.  We speculate that these failures were due to NFC not being fully enabled at the merchant locations in question, and no transactions were posted to the cards loaded in the wallet in these situations.

Closing Observations

Overall, Isis’s initial wallet offering works as advertised, and its shortcomings (as reported in app store reviews) are generally related to availability, rather than to usability, reliability, or security.  However, consumers, not payments industry professionals, will be the real judge of whether the Isis wallet can supplant cards over time.  Recent reports that the wallet interface will be re-developed suggest that even Isis is not fully satisfied with its initial offering.  Also, Isis and the industry at large understand that the ultimate success of the wallet will be driven by the adoption of NFC, which will be a multi-year process.  However, while much of the industry commentary has highlighted that swiping a plastic card is a reliable, well-entrenched process and that mobile payments don’t solve a specific problem, we should also ask the question, “If mobile provides a quick and reliable payments experience, why wouldn’t consumers pay with their phone?”

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