Isis Fees Give Issuers Pause

by Mercator Advisory Group 0

In another excellent NFC Times article (hat tip!), the costs for card payment credential storage on an Isis-managed NFC smartphone are discussed. And they aren’t cheap. At $5 per year per card, that is significantly more expensive per account than a standard card which the issuer has to provide as well. The Isis proposition to the issuer is, of course, that their customers are headed to an all mobile payments world with tap-and-go payments at the center of that activity and if the issuer wants to see transactions from that new world, it better get on board. The issuers are balking at the price.

Another intriguing item from the article is the news that Isis is only about NFC-based proximity payments. Individual mobile operators plan to charge for access to the NFC facility for non-payment activities such as physical access.

The roughly $5-per-year fee sources say Isis is quoting issuers only apply to payment and related services. Other service providers would do business with the individual Isis telcos directly and would have to pay the telcos fees to access their NFC SIMs.

Verizon, AT&T and possibly T-Mobile are preparing to recruit their own TSMs to handle nonpayment applications, NFC Times has learned.

These applications would include access control, transit and other secure applications. For example, Verizon could enable hotel keys or corporate badges to be downloaded to its NFC SIMs. The applications may or may not be part of the Isis wallets the carriers roll out.

The split between payment and nonpayment applications was planned and the fact individual Isis telcos are seeking to hire their own TSMs doesn’t mean they are less committed to Isis, sources working on the project told NFC Times.

“Isis’ mandate is NFC payments at the point of sale,” said one source. “That puts them in a box. Their investors, AT&T and Verizon, are definitely looking at monetizing that secure element in nonpayment.”

Hopefully, those TSMs for non-payment applications will work together to provide a single interface and a single cost model. If each enterprise has to work with three or four mobile operators NFC will move to irrelevancy pretty quickly simply because the provisioning and business relationship management will be too complex. For a hotel clerk to issue an access card to an app on the phone, it must be as simple as getting the guest’s mobile number and entering a room number. For that to happen, the application integration has to be easy, too.

The NFC ecosystem is fraught with proprietary approaches and individual business requirements. Pushing credentials of any sort to mobile devices via TSM is no simple task. Compared that with a simpler, alternative approach that connects a single credential (the mobile device itself) to cloud-based services that handle the payment and other functions. With so many parties wanting in on the NFC Land Grab, we will not be at all surprised to see many enterprises looking for ways around the complexity.

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