Mobile commerce in the United States will have three Mobile commerce products,  each with similar features, similar benefits, similar functions.  However, all three have different sets of partners,  operate on at least two different types of networks, and will certainly have three different delivery systems.   It’s like a triangular boxing ring with the  boxer in each corner:  if two of the three decide to work together, it’s over.

Chapter 3 of the book, The SmartPhone Wallet describes the negative impact that a format war could have on the development and adoption of mobile commerce products in the United States, and around the world.   The book, published last December, warns that two different formats in the marketplace could set mobile payments back several years from delivering its full potential.

Based on today’s announcement from MasterCard–Google–VeriFone and others, there will be three different formats vying for attention, customers, and retail adoption before the end of 2011.

Whether or not they are compatible or cross-functional remains to be seen. Unfortunately, our initial analysis indicates that these differences will also mean these systems are incompatible with one another. That means a retailer that invests in one of these three solutions will need to reinvest if a different solution ends up being the winner. And there will be one winner, eventually.

The three  are:

(1)           Isis;

(2)           Visa, and;

(3)           Google-MasterCard–VeriFone–First Data–Citi-Sprint-Bloomingdales

The latter probably needs a better name, but that is a problem for another day.

Here are the announcements from all three providers:

The Google (et al) announcement:

Google, Citi, MasterCard, First Data and Sprint team up to make your phone your wallet

Google Wallet will enable consumers to tap, pay and save with their phones

May 26, 2011, New York, NY

At an event today, Google, Citi, MasterCard, First Data and Sprint announced and demonstrated Google Wallet, an app that will make your phone your wallet so you can tap, pay and save money and time while you shop. For businesses, Google Wallet is an opportunity to strengthen customer relationships by offering a faster, easier shopping experience with relevant deals, promotions and loyalty rewards.

“Today, we’ve joined with leaders in the industry to build the next generation of mobile commerce,” said Stephanie Tilenius, vice president, commerce and payments, Google. “With Citi, MasterCard, First Data and Sprint we’re building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC wallet and redeem consumer promotions all in one tap, while shopping offline.”

Google Wallet is currently in a field test and will be available to consumers this summer. At the event, Google, Citi, MasterCard, First Data and Sprint introduced Google Wallet and invited additional issuing banks, payment networks, mobile carriers, handset manufacturers, point of sale systems companies and merchants to join the initiative.

Next Step in Mobile Payments

At commercial launch, Google Wallet will support payments with two payment solutions: a PayPass eligible Citi MasterCard and a virtual Google Prepaid card. Most people who already have a PayPass eligible Citi MasterCard can simply add it to Google Wallet over the air, using First Data’s trusted service manager service. Or, they can fund the Google Prepaid card with any payment card.

Google Wallet uses near field communication (NFC) to make secure payments fast and convenient by simply tapping the phone on any PayPass-enabled terminal at checkout.

Google Wallet is engineered to enable secure payments and goes beyond what’s possible with traditional wallets and cards. It will require an app-specific PIN and in the first release, all payment card credentials will be encrypted and stored on a chip, called the secure element, that is separate from the Android device memory and is only accessible by authorized programs.

“Citi’s role as the lead bank in Google Wallet is the latest demonstration of how we are committed to becoming the world’s digital bank, providing to customers the tools they need to manage their everyday finances with convenience and value,” said Paul Galant, CEO, Citi Global Enterprise Payments. “Today’s announcement and our active collaboration with Google will be looked at as the inflection point for how mobile payments are evolving from concept to mass utilization.”

Accepted in Stores Nationwide

Google Wallet is built to work with the fast growing MasterCard PayPass network—a merchant point of sale service that enables consumers to tap to pay. As a result, Google Wallet will immediately be accepted at more than 124,000 PayPass-enabled merchants nationally and more than 311,000 globally.

“MasterCard has pioneered mobile payments with our PayPass technology and we’re proud that it is at the heart of Google Wallet,” said Ed McLaughlin, chief emerging payments officer, MasterCard. “We’re excited to partner with these industry leaders today and committed to continuing to play a leadership role in the development of mobile payment technologies.”

Google is also working with point of sale systems companies and top retail brands to create a new SingleTap shopping experience. Consumers will be able to pay for an item using a credit card or gift card, redeem promotions and earn loyalty points—all with a single tap of their Google Wallet. Google is working with VeriFone, Hypercom, Ingenico, VIVOTech and others to develop these next generation point of sale systems. Retailers participating in the new SingleTap experience include: American Eagle Outfitters, Bloomingdale’s, Champs Sports, The Container Store, Duane Reade, Einstein Bros. Bagels, Foot Locker, Guess, Jamba Juice, Macy’s, Noah’s Bagels, Peet’s Coffee & Tea, RadioShack, Subway, Toys“R”Us and Walgreens.

“Google Wallet allows us to harness the power of mobile technology to enhance our in-store shopping experience and helps bridge the gap between our online and in-store consumer interactions,” said Martine Reardon, executive vice-president of marketing and advertising, Macy’s. “Macy’s is always looking for cutting-edge technology that will deliver value and engage our customers in personal ways. Google Wallet delivers this unique interaction across channels.”

The first Google Wallet field tests are focused in New York and San Francisco, where many retailers, Coca-Cola vending machines and even taxis are PayPass-enabled, including major outlets such as CVS, Jack in the Box, Sports Authority and Sunoco. First Data, a global leader in electronic commerce and payment processing, is actively recruiting thousands of new merchants in these areas and will soon expand those efforts to deploy more contactless merchant terminals across the country.

“The payments industry has known for some time that it was not a question of if, but when true mobile commerce would become a reality. We believe today is the day that mobile meets payments,” said Ed Labry, president, North America, First Data. “We’re proud to play a central role in Google Wallet and to bring innovative technology such as Trusted Service Management and contactless acceptance to our clients.”

Saving Made Simple

Google has also been testing a variety of consumer deals that can range from a 20-percent discount on a new pair of boots discovered on a Google search advertisement; to a $5 off check-in offer received upon entering a store; to a “deal of the day” offering a $20 lunch for $10 at a local restaurant. Whenever you buy or save an offer, you will be able to automatically sync it to Google Wallet.

At most stores you will be able to use Google Wallet to show your offer at the register, where the cashier will either scan it or manually type it in. At participating Google SingleTap merchants, you will be able to pay and redeem an offer with one tap of your mobile device.

Because Google Wallet is a mobile app, it will eventually be able to do more than a regular wallet ever could—but without the bulk. Google Wallet will start with offers, loyalty and gift cards but some day items like receipts, boarding passes and tickets will all be seamlessly synced to your Google Wallet.

Open Commerce Ecosystem = Consumer Choice and Innovation

Google Wallet will work best if it’s an open commerce ecosystem so you will be able to carry all the credit cards, offers, loyalty and gift cards you choose—and eventually much more. To this end, Google Wallet will make it possible to integrate numerous types of partners, and Google, Citi, MasterCard, First Data and Sprint invite the banking community, mobile carriers, handset manufacturers, merchants and others to work with Google Wallet.

“We are delighted to be the first carrier to sign on as a partner with Google to deliver Google Wallet,” said Fared Adib, senior vice president of product development, Sprint. “As a leading innovator and proponent of “open,” we are proud that Nexus S 4G is the first smartphone with Google Wallet and we look forward to deploying Google Wallet on many of our upcoming Android phones.”

The first release of Google Wallet is expected to be released on the Nexus S 4G on the Sprint network. Additional devices with NFC capabilities will follow. Sign up to be notified about the release at google.com/wallet.

About Google Inc.

Google (NASDAQ: GOOG) is a global technology leader focused on improving the ways people connect with information. Google’s innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world. For more information, visit www.google.com/about.html.

About Citi

Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Additional information may be found at www.citigroup.com.

About MasterCard

As a leading global payments company, MasterCard (NYSE: MA) serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants and cardholders worldwide in more than 210 countries and territories. For more information, please visit us at www.mastercard.com. Follow us on Twitter: @mastercardnews.

About First Data

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.

About Sprint

Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 51 million customers at the end of 1Q 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 6 in its 2010 Green Rankings, listing it as one of the nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

The Visa announcement:

North American Launch of New Digital Wallet with “Click-to-Buy” Functionality Scheduled for Fall 2011

San Francisco, May 11, 2011

Visa Inc. (NYSE: V), a global leader in electronic payments, today announced the next generation of payments solutions that will replicate the ease, reliability and security of Visa point-of-sale payments within traditional and digital eCommerce, mobile commerce and burgeoning social networking commerce environments. New offerings are expected to include a secure cross-channel digital wallet and a range of customized mobile payments services that address the specific requirements of geographic markets around the world.

“Our new solutions deliver greater consumer choice, convenience and control while helping our clients grow their businesses. By helping to reduce abandoned online shopping carts and bringing new account holders into the Visa network, we create a win-win-win for merchants, consumers and financial institutions,” noted Joseph W. Saunders, Chairman and Chief Executive Officer of Visa Inc. “In addition, we believe Visa’s new payments products and services will help expand financial inclusion to the billions of mobile subscribers today who currently lack access to traditional financial services.”

Simplifying Commerce in Complex Economies
In certain countries with established electronic payments infrastructures, expansive Internet usage and broad mobile network penetration, Visa will be introducing a digital wallet and services platform. The digital wallet will store Visa and non-Visa payments accounts, support NFC payments through the innovative Visa payWave application and deliver a wide range of transaction services to accommodate multiple commerce scenarios–including eCommerce, mobile commerce, micropayments, social networks and person-to-person payments.

Visa is working with leading payments card issuers, community banks, credit unions, acquirers, payments processors and merchants to launch the digital wallet.  Among the financial institutions and organizations supporting Visa’s wallet strategy are:

• Barclaycard US
• BB&T Corporation
• Card Services for Credit Unions (CSCU)
• ICBA Bancard
• First Financial Bank of Ohio
• Nordstrom fsb
• Pentagon Federal Credit Union
• PNC Bank
• PSCU Financial Services
• Regions Bank
• Royal Bank of Canada
• Scotiabank
• TD Bank Group (US and Canada)
• US Bank

Visa expects to launch the digital wallet in the U.S. and Canada in fall 2011.

Key features of the wallet are expected to include:

• Click-to-buy: Shop conveniently and securely by simply entering an email address, alias or online ID and password, instead of a billing address, account number and expiration date. In addition, Visa is exploring dynamic authentication technologies that will bring added layers of security to online purchases.
• Cross-channel payments solution: The wallet consolidates multiple Visa and non-Visa payments accounts and can be used in mobile, eCommerce, social network and retail point-of-sale environments.
• Preference management: A menu that enables consumers to set preferences for how their wallet will work, allowing them to customize and control the features of their personal wallet from privacy settings to designating which account will be accessed based on merchant type or purchase amount.
• Merchant offers: A service that allows consumers to personalize their shopping experience by opting-in to receive money-saving discounts or promotions from participating merchants.

“The widespread adoption of Internet and mobile technology is changing the way people connect and transact across the globe, so we’re focused on delivering locally-tailored payments products and services,”  said Saunders. “We are introducing new solutions for eCommerce and mobile devices that provide the same ‘Visa-quality’ experience–convenience, reliability and security–people enjoy when using their Visa cards at a retail location. In doing so, we are accelerating the global shift to digital payments by harnessing our brand, products, network and 50-plus years of payments experience.”

Mobilizing Payments in Emerging Economies
In certain emerging geographic markets with significant mobile penetration, Visa will work with financial institutions and mobile-network operators to provide consumers with a secure, reliable and globally accepted form of payment and the ability to transfer and receive funds, manage financial accounts or top-up wireless air time using their mobile handset. The wide range of features and functions being developed for the digital wallet will allow Visa to pursue a number of strategies to tailor or bundle services to local needs.

• In countries like India and Russia, where card issuance and mobile subscriptions are high, but card usage is relatively low, Visa will help drive account activation and usage by working with financial institutions and mobile operators to link existing card portfolios with mobile devices to give handsets payments functionality.
• In countries within Africa and the Middle East where mobile device usage is high and traditional electronic payments infrastructure is less developed, Visa will work with mobile network operators to link new virtual mobile prepaid Visa accounts to mobile phone numbers to enable cash-in, cash-out, personal payments and mobile payments –including bill payments and wireless airtime top-up.  Visa also intends to connect existing “closed loop” mobile money services that today provide basic mobile banking and payments services to unbanked and under-banked consumers to its global, open loop network–VisaNet. The integration will open closed loop systems, and provide consumers and merchants with unprecedented scale, functionality and acceptance beyond their existing local geographic footprints.

Across all emerging geographic markets, Visa’s sophisticated payments technology and significant work in establishing global payments standards will aid in navigating the complexity of the myriad of network operators, handset models and operating systems in use globally, helping to enable millions of new and existing Visa account holders to simply use mobile technology for payments services.

Innovation, Acquisitions and Partnerships Expand Capabilities of Visa Network
Visa is developing its next generation services by integrating VisaNet, its global processing network, leading credit, debit, prepaid and commercial product platforms, new capabilities it has acquired through its subsidiaries CyberSource, Authorize.net and PlaySpan, and the unique expertise and services of key commercial partners. In deploying flexible solutions that are locally relevant and globally interoperable, Visa aims to attract more participants to its network and better enable them to connect and transact.

“Our build, buy and partner approach puts Visa in a unique position to deliver the speed-to-market and scalable solutions needed to stay ahead of new demands created by the convergence of Internet, mobile and electronic payments technologies,” said Saunders. “Visa and our subsidiaries are working with financial institutions, merchants, mobile network operators, and innovative technology providers to bring new ways to pay and be paid to more consumers and merchants around the globe.”

Management Webcast
Visa’s management team will host a live audio webcast beginning at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) today. The dial-in information for the call is 888-790-4410 (within the United States) or 773-756-0127 (international). The conference passcode is 092075. A replay of the call will be available until May 26 and can be accessed by dialing 866-501-8774 (within the United States) or 203-369-1854 (international).  The live call and replay, along with supporting materials, can also be accessed through the Investor Relations section of Visa’s website at www.investor.visa.com.

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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by the terms “will,” “expected,” “intends,” “aims,” “accelerate,” expand,” and similar references to the future. Examples of such forward-looking statements include, but are not limited to, the timing, impact, content, reliability, acceptance, implementation and overall success of the new digital wallet and mobile payment, the offerings. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are neither statements of historical fact nor guarantees of future performance and (iii) are subject to risks, uncertainties, assumptions and changes in circumstances that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements because of a variety of factors, including:

• the impact of new laws, regulations and marketplace barriers, particularly those affecting, eCommerce, mobile payments, consumer privacy, and data use and security;
• macroeconomic factors, such as  global economic, political, health environmental conditions;
• a decline in the growth of e-Commerce and mobile payments activity;
• inability to keep pace with the innovations of competitors in the eCommerce and mobile payments areas;
• industry and systemic developments, such as:
  • competitive pressure on pricing;
  • bank and merchant consolidation and their increased focus on costs;
  • adverse changes in our relationships and reputation;
  • disruption of our systems or the inability to process transactions efficiently;
  • account data breaches and increased fraudulent and other illegal activity involving our systems; and
  • issues arising at Visa Europe, including failure to maintain interoperability between our systems;

and the other factors discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K on file with the U.S. Securities and Exchange Commission. You should not place undue reliance on such statements. Unless required to do so by law, we do not intend to update or revise any forward-looking statement because of new information or future developments or otherwise.

Media Contact:
Ryan Donovan
Visa Inc.
+1 415 932 2564
globalmedia@visa.com

(One of the) Isis interviews:

Isis sets record straight, debunks Wall Street Journal article

By Giselle Tsirulnik

---

May 5, 2011

Isis will support NFC payments via its mobile commerce network

A Wall Street Journal article regarding Isis, the joint venture by Verizon Wireless, AT&T Mobility and T-Mobile, has stirred up a lot of buzz around the industry. However, Isis claims that the Journal article is profoundly inaccurate.

Contrary to what WSJ is reporting, Isis claims it will still be focused on building a mobile commerce network supported by NFC-enabled payments and a mobile wallet, like it initially announced in November. Some news reports have gone as far as to say that the carriers have pulled out of Isis altogether. Isis has confirmed this is not true.

“The tone and some of the points in the Journal article were profoundly inaccurate,” said Jaymee Johnson, spokesman for Isis, New York. “To roll back the clock a little, in order for mcommerce to work, it takes an incredible amount of alignment from the mobile, financial and merchant industries.

“We took the initial strategy of fewer partners to see if we can bring those forces into alignment,” he said. “And last year in November, when Mike Abbott came on as CEO, there were some profound changes in regulation around how payments are priced to a consumer.

“But, more importantly, as we spoke to the merchant community, banks and payment networks there was a lot of interest in working with Isis. So now, our initial strategy with working with fewer has accelerated to working with more.”

Setting the record straight
The news is that Isis is now going from one payment network to many networks and from one issuer to many issuers.

The reason for the change of heart is to get to market much faster, with more scale, Isis claims.

“The bottom line is Isis is now open to more partners to build the mpayments industry and is igniting a one ecosystem factor,” Mr. Johnson said.

From the very beginning Isis was focused on building a mobile commerce network (see story).

The network will still be focused on mobile payments via NFC, but the mobile wallet will also be a key part of the operability. Banks will be able to get consumers’ credit cards onto the mobile device.

Additionally, Isis is going to build in some opportunities for merchants to be able to target consumers with relevant offers and deals based on past purchases.

News media sources have been saying that AT&T and Verizon are already in talks with MasterCard and Visa to join the Isis mobile commerce ecosystem.

“We can’t talk about the particular partners yet,” Mr. Johnson said. “What I can say is that we are open and actively looking for networks and banks and are in discussions with multiple parties.

“When we have the names to share, we will do so,” he said.

As we can see some of the news reports were very misleading.

Fueling mpayment success
Isis’ announcement of opening the doors to many partners will surely fuel its success in building a mobile commerce ecosystem.

The network will likely have greater reach, especially if the big dogs – Visa and MasterCard – jump on board.

“Supporting MasterCard and Visa was always part of the Isis strategy because those brands are essential to its success with consumers, as Drew Silver correctly pointed out in [yesterday’s] WSJ article,” said David W. Schropfer, author of The Smartphone Wallet and an analyst with The Luciano Group, Red Bank, NJ.

“To succeed with retailers, Isis will leverage its existing relationship with Discover, and a developing relationship with VeriFone,” he said. “Between Discover and VeriFone, Isis will reach up to half of all retailers in the United States, and almost every major retailer.

“Finally, the Salt Lake City test which launches later this year will be used to wow retailers by showcasing value–added merchant services like loyalty programs, tender steering features, and unprecedented security.”

Giselle Tsirulnik is senior editor at Mobile Commerce Daily and Mobile Marketer. Reach her at giselle@mobilemarketer.com.

I do not think the AMEX product is significant based on their relatively small market share compared to the top three formats, but here is their description of their new product, Serve:

Serve is an innovative, secure, digital payment and service platform designed for the way you live. Serve is designed to address the changing ways consumers interact and exchange money — with one another, and with merchants. Provided by American Express*, a respected, global payment and travel company for over 160 years, Serve intends to create a new paradigm in the way we use money.

Serve offers you multiple payment options, including person-to-person (P2P) money transfers, mobile payments, in-store card payments and online transactions – all combined in a single, unified account.

Today is just the beginning for Serve. We have big plans for tomorrow and plan to change and adapt to the way you really want to use and manage your money.  Take a look around and see what you think, try us out and send us any suggestions. Visit the Serve blog to learn more about Serve.

As you can see, each of these three announcements describes the same essential product and features, but the partners our difference and the systems that enable each product are different also.

Retailers and consumers beware: if you choose any one of these three, make sure it offers a better value proposition than the other two. If you don’t, the promise of cost savings through mobile commerce can be lost.

© 2011 by David W. Schropfer