Evan Schuman's StorefrontBacktalk

If these two could somehow meet in the middle, they might actually be able to deliver something. But that’s not likely. And even with all the major card brands under its belt, ISIS is facing several very large obstacles in its race to beat Google.

Actually, that’s ISIS’ first obstacle: This is a race, and ISIS has to beat Google—and eventually Apple and PayPal, but Google’s mobile-payments approach is the most like ISIS. In fact, from the point of view of consumers, ISIS and Google are indistinguishable—both mobile wallets handle payment cards, loyalty and giftcards and coupons.

From the point of view of retailers, neither one holds out hope of interchange relief and both will require POS upgrades. But retailers aren’t going to do this twice. There’s only room at the POS for one. Waiting until the end of the race to woo retailers will only work for ISIS if Google fouls up spectacularly.

It doesn’t help ISIS that both retailers and consumers know Google and have never heard of ISIS. It doesn’t inspire confidence that ISIS plans to deliver a payment system on a massive scale to its first tests in Salt Lake City and Austin next year, while Google has been fielding experiments using near-field communication (NFC) in larger cities for years. (Which type of IT project is most likely to succeed?)

“Consumers will be able to walk into any wireless retailer and choose from multiple NFC handsets running multiple operating systems,” points out ISIS’ Johnson. But Google makes the most popular of those operating systems—and AT&T and Verizon aren’t likely to give up Android just to spite Google Wallet.

ISIS does have a trump card, and it’s about scale too: the fact that ISIS owns (or rather, is owned by) the biggest mobile networks. Google’s pilot project will use Sprint, the weakest of the U.S. carriers. Google can bring in other payment-card brands and banks, but if AT&T or Verizon mobile customers want to use a mobile wallet, Google is out of luck—right?

Only if Google can’t manage to marginalize the mobile operators’ role. If Google Wallet turns out to be completely carrier-agnostic, the only way ISIS members could keep it off their phones would be by actively blocking it. Good luck slipping that past federal antitrust enforcers while AT&T is trying to convince them that swallowing T-Mobile won’t stifle competition.

Let’s be clear: The leading contender for mobile wallets is still None Of The Above. There’s a reason contactless POS devices are a tiny fraction of mag-stripe PIN pads: It’s hard to convince customers to change, and until customers change retailers don’t see the point. Most consumers will still carry a physical wallet for cash, driver’s license, insurance cards and all the other items that aren’t going into a mobile wallet any time soon.

Hmm—maybe ISIS and Google should try to meet in the middle. Getting scale where it counts—among consumers—looks like it will need all the help it can get.