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Mobile Muddle: When Will ISIS Start Making Sense?
That’s why, in almost every one of the recent NFC payments announced over the past few months, there’s always a bank (Citi, Chase, B of A), a card company (Visa, MasterCard) and a technology vendor (Google, DeviceFidelity or a mobile operator). Contactless card emulation is a heck of a lot easier for these players than true mobile payments.
It’s also a lot easier for retailers. Nobody really wants to mess with POS software—that’s just too dangerous. And no retailer is much inclined to add another POS device at a checkout counter. That’s valuable selling space for impulse purchases. And retailers already have a payments system that works, even though they hate the hefty bite that Visa, MasterCard and other card companies take from each transaction.
That’s one of the problems ISIS—and all mobile-payments players—will have to face to move beyond contactless emulation. The only place that retailers think the payments loop is broken is interchange. But ISIS isn’t proposing to change that—not with Discover in the loop, along with (potentially) other conventional card networks.
An even more problematic disconnect exists for the mobile-payments players: Most of the current plans for replacing a wallet full of credit cards with an NFC mobile phone are built on the assumption that customers want to get rid of all those credit-card accounts and replace them with a single account on the customer’s phone.
That’s a very attractive idea to a bank or card company—at least as long as all the other banks and card companies are being cut out of the deal. But it’s irrelevant to retailers, which aren’t going to benefit from taking fewer types of payments. And it’s an awful thought for any consumer who has ever had a payment card declined. What’s a customer to do when his phone is declined—pull out another phone from a different mobile operator?
To all appearances, ISIS hasn’t thought through those really tough questions. Then again, neither has anyone else. But with luck, by the time ISIS starts handling payments in Salt Lake City in 2012, we’ll already have seen a dozen trials that will have tested just how far mobile payments can go—and maybe they’ll provide the clarity that has proven so elusive for ISIS.
-Marc
April 13th, 2011 at 11:22 am
I can’t help but feel I am missing something – I’ve heard this point several times in regrads to ISIS and how they should do mobile payments/purchases:
“a mobile operator can authenticate a customer, and already does that every time the customer makes a phone call.”
But really – they’re just authenticating who the phoen is tied to… it doesn’t know when I hand my phone to a friend so she can make a phone call… as far as it knows, it’s me making it. And what if I lose my phone? Anyone can make a call with it – until I report it lost/stolen, the phone doesn’t authenticate that it’s not me using the phone…
So why would it be so great to use the phone to authenticate the user and add the purchase to their phone bill? In my opinion – there are enough unauthorized third party charges that can be added to your phone bill (usually getting there through social engineering or spam)… we don’t need another way to tack on more charges… unless the phone company wants to be the one to write off unauthorized charges. Short of reporting your phone lost/stole, would they even be willing to correct the charge?
There is a lot of grey area here – and many ways for people to be able to work the system (sadly)… I fail to see how using a cell phone could possibly make it any more secure and prove that it was me using it. Not that anyone checks your ID when you write CID on the back of your credit card either though. Sadly today I don’t think much merchants much care if you’re truly the authorized user or not.