The service, which lets users make purchases by tapping their phones, will work on Apple Inc.’s (AAPL) iPhones as well as Microsoft Corp.’s Windows Phone and BlackBerry Ltd.’s newest smartphones, Isis said in a statement. It will continue to work with some devices powered by Google Inc.’s Android software.
Isis has been testing the technology at more than 4,000 locations in Austin, Texas and Salt Lake City and will expand nationwide later this year. Succeeding in U.S. mobile payments has been a challenge for dozens of startups as well as Google, through its Wallet application, because no mainstream standard has emerged and consumers have stuck with cash and plastic.
“What you’ll see coming from us is a vastly improved product, a variety of new places to use it, a vastly improved user experience,” Ryan Hughes, chief marketing officer at New York-based Isis, said in an interview.
By working on the iPhone, Isis is indicating that it’s expanding beyond a technology called near-field communication (NFC), which hasn’t taken off as expected. Global NFC-based retail transactions will reach $110 billion in 2017, down from a prior forecast of $180 billion, according to Juniper Research. Apple, which hasn’t adopted NFC, captured 39 percent of the U.S. smartphone market as of May, according to ComScore Inc.
Carriers plan to use the Isis app to capture new forms of revenue, such as advertising, as the pool of potential new smartphone customers shrinks from market saturation. Wireless revenue in the U.S. rose 3.2 percent in the first quarter from a year earlier, down from 5.7 percent growth in the first three months of 2012. Sprint Corp. (S) is the only of the four biggest U.S. carriers that’s not part of the launch, Hughes said.
In its tests, Isis users tapped their phones on average more than 10 times a month, Hughes said, declining to say how many people participated. Two-thirds of users opted to receive offers and messages from their favorite brands, he said.
“You’ll soon be able to walk into a store in Boise or Tallahassee or Chicago and take advantage of this technology,” said Hughes.
By helping banks and merchants promote their products, carriers could potentially earn $316 to $538 per user per year from the Isis wallet app, according to Richard Crone, who heads payments consulting firm Crone Consulting LLC.
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