Evan Schuman's StorefrontBacktalk

ISIS is scaling back expectations for how much its mobile payment system will be used, even before it launches. Last week, ISIS Chief Marketing Officer Ryan Hughes told GigaOM, “We’re not trying to hit a home run, but get a bunt single.” That’s wise, given the very low levels of customer use for Google Wallet and the relatively low usage and security issues that have muddied PayPal’s Home Depot trial. In fact, ISIS’s expectations may still be too high, considering what happened to Chip-and-PIN, contactless in the U.S.

After all, even the hottest things in retail-chain POS today—iPads and iPods outfitted with sleds—still only handle one type of payment device: a magstriped card.

Everyone agrees that magstripes are insecure and unreliable, easily cloned and easily damaged. Contact Chip-and-PIN is much more secure. Contactless is much more convenient. Tapping with a mobile phone would be secure, convenient and let chains deal in mobile coupons and more effective CRM. Visa, MasterCard, Google, ISIS, a whole slew of smaller mobile payments competitors, even the group of retail treasury types who are mulling their own new payments proposal—they’re all on board with the idea that magstripe’s time is done.

And that’s everyone, right? Well, except customers, who like their magstripes fine. And store managers and associates, who don’t want to deal with training hassles and unfamiliar processes and equipment, especially because magstripes are what all the customers already know how to use. And even retail IT departments, which often talk a good game for improved payment technologies but actually roll out in-store mobile checkout systems that only support magstripe.

In practice, magstripe is a veritable god for U.S. retail payment, worshiped almost universally. Retailers have been lukewarm to anything besides the stripe. Consumers have been oblivious to alternatives—even consumers who will use their phones to shop and buy online. Except for a few heretical gadget freaks, the standard drill is to swipe the stripe.

Chip-and-PIN can’t buy a break in the U.S. Contactless has so far been a huge waste of resources. Most major chains now support contactless, and many support contact chip (with or without PIN) at the fixed POS. But it’s all pro forma, because those non-magstripe capabilities go unused. Associates are, in effect, trained not to use them. Magstripe isn’t just a legacy. It’s what associates prefer, what POS hardware is optimized for and what customers assume as the default.

Even at Home Depot, where theoretically the entire chain has been refitted to handle PayPal’s new in-store payment cell-number-plus-PIN system, the alternative for any PayPal payer who finds that insecure is a plastic card with a magstripe.

And outside of major chains, the fastest growing alternative payment system, Square, requires magstripe.

The idea that magstripe is so well-entrenched didn’t seem possible when word of the Google and ISIS mobile wallet efforts first started leaking out.