Verizon Wireless, AT&T Inc. and T-Mobile USA plan to invest more than $100 million in their joint venture that lets consumers pay for goods with mobile phones, people with knowledge of the project said.
The investment sets up a showdown between the venture, known as Isis, and rivals like a mobile-payment service from Google Inc. The amount of funding depends on how successful Isis is at attracting banks and merchants, said one of the people, who asked not to be identified because the financing is private.
The carriers have created the alliance to grab a piece of the market for mobile commerce, which lets consumers buy things by tapping devices against a reader at checkout. The market may reach $670 billion by 2015, Juniper Research says. The carriers may invest hundreds of millions of dollars in the venture if it gains followers, one person said, helping it catch up with Google, which unveiled its own mobile-wallet service in May.
“Over the long haul, operators have to create new businesses that derive value from more than access,” Chetan Sharma, an independent wireless analyst in Issaquah, Washington, said in an interview. “It’s a given that people are going to be transacting more over cell phones. It could open a potential new revenue stream for them.”
Worldwide mobile payments will generate $240 billion this year, growing two to three times that amount within the next five years, according to consulting firm Juniper Research.
Formed last year, Isis also would let consumers receive and redeem coupons via their mobile devices -- in addition to making payments. The service, which will debut in several cities next year, will make money by charging marketers a fee for sending offers to consumers’ phones.
“Isis remains on track to launch in key markets, including Salt Lake City and Austin, in early- to mid-2012,” Jaymee Johnson, head of marketing for Isis, said in a statement. He declined to comment on funding.
Mark Siegel, an AT&T spokesman, also declined to comment, as did T-Mobile’s Hernan Daguerre. The two companies are poised to merge early next year, assuming AT&T’s $39 billion bid passes regulatory scrutiny. Albert Aydin, a Verizon Wireless spokesman, didn’t return a request for comment on Isis’s funding.
Isis also has built ties with the financial industry. It has partnerships with Visa Inc., MasterCard Inc., Discover Financial Services and American Express Co.
The venture’s carrier owners may decide to increase the pace of the service’s deployment to compete with rival mobile-payment efforts, one of the people said. Google is equipping merchant cash registers to accept its Google Wallet service.
Visa, which runs the world’s largest credit-card network, is hedging its bets. In addition to supporting Isis, it also is working on its own mobile-payment service. And it recently introduced incentives to encourage U.S. merchants to adopt new credit-payment terminals able to accept mobile payments.
Isis aims to get ahead of its rivals by relying on its carrier partners’ existing distribution network and customer relationships. Phones set up for Isis service are expected to be available at carrier stores in the trial cities.
“We have yet to announce our national rollout plans,” Isis’s Johnson said.
The carriers could potentially preinstall Isis software onto their phones, making it easier to use. They also may push handset manufacturers to adopt Isis software.
Samsung Electronics Co. and Research In Motion Ltd. are rolling out new phones that can tap on card-payment terminals at cash registers to make mobile payments. By 2014, at least one in five smartphones globally will rely on a technology called near field communications to offer mobile-payment functions, according to Juniper Research.