The Isis mobile wallet will roll out nationwide later this year and will even make its way onto the iPhone, via a case with an embedded NFC chip. However, whether the necessary infrastructure is in place for wide-scale adoption is still a question.

With competition growing in the mobile payments space, Isis, a joint venture of AT&T, T-Mobile US and Verizon Wireless, may be feeling under pressure to get its solution into more consumers’ hands before MCX, a  collaborative effort of many leading retailers, launches its mobile payments offering this year. While the number of retailers and consumers equipped with the right devices for NFC payments is still limited, Isis is reporting some positive results from its initial pilot in two cities.

“There are certainly more merchants with NFC, but it’s still statistically small relative to the merchant universe,” said Drew Sievers, founder and CEO of mFoundry, Larkspur, CA.

“While there are 20 million phones with NFC according to the ISIS release, that’s still only a bit over five percent penetration, and that doesn’t mean that 20 million people are using, or even understanding, NFC,” he said.

“NFC will grow next year for certain, but I’d be surprised if it was anything but a rounding error in the world of payments.”

Brand engagement
The Isis Mobile Wallet was launched last year as pilot in Austin, TX, and Salt Lake City. It uses NFC technology to enable users to pay, redeem coupons and present loyalty cards by tapping their phones against a contactless reader in retail locations.

Some newly released results from the pilot are encouraging.

For example, Coca-Cola reports that more than one-third of active Isis Mobile Wallet users in Austin have loaded a My Coke Rewards card onto their wallet since the pilot began, and 90 percent of these are new to the Coca-Cola loyalty program.

Merchants are also reporting success with Isis.

Jamba Juice introduced offers to the Isis Mobile Wallet in the pilot cities, helping to drive incremental foot traffic and increase the frequency of consumer store visits. The chain is planning to expand the program nationally.

Isis is driving brand engagements in other ways, with two-thirds of active users opting in to receive offers and messages from brands, following an average of seven brands, according to the company. Also, wallet users engaged in loyalty and offers tap up to two times more frequently than users who only make payments.

Everyday purchases
Additional results include that Isis users tap more than ten times per month, and more than 80 percent of transactions take place at everyday spend locations such as quick-service restaurants, coffee shops, gas stations, convenience and grocery stores.

This last finding supports the fact that much of the growth and activity in mobile payments over the past year or so has come from merchants that are frequented on a regular basis for smaller, everday purchases. The biggest example is Starbucks, but McDonalds, Burger King and others in this category are also actively experimenting with mobile payments.

While many expect NFC to play a big role in mobile payments going forward, adoption has been slow.

There are two important hurdles for gaining wide adoption of NFC technology: consumer penetration for NFC-enabled devices and retailers equipped with the necessary contactless point-of-sale systems.

To use the Isis Mobile Wallet, consumers need an NFC-enabled smartphone and a SIM-based secure element.

There are currently nearly 20 million smartphones in the market that feature NFC technology, according to Isis. Millions more are being shipped each month by AT&T, T-Mobile US and Verizon Wireless.

Additionally, there are 35 mobile devices available from these carriers that support Isis. For example, NFC is a standard feature in Samsung’s flagship smartphones, including the Galaxy S4.

To spur further consumer adoption, Isis said it expects support for iPhone, Windows Phone and Blackberry 10 devices later this year.

Given that the iPhone has famously eschewed NFC technology to date, Isis will make available a phone case for the iPhone that is embedded with NFC technology.

Contactless readers
While the number of retailers with contactless readers is steadily growing, there is still a long way to go. The majority of retailers are not expected to adopt contactless payments until the deadline for EMV in 2015 gets closer.

According to Isis, 25 of the top 100 national retailers have deployed or are deploying contactless terminals.

Aite Group projects that 1.3 million locations in the United States will have contactless-ready payment terminals by year end, which would make it the most broadly deployed mobile payments technology at the point of sale.

Isis is hoping that by making its mobile wallet more widely available, this will help spur broader adoption of contactless payments by merchants.

For example, contactless acceptance nearly quadrupled to more than 4,000 locations in Austin and Salt Lake City since Isis was introduced in these cities, according to the company.

“We’ve proven the power of an open platform and created an ecosystem of literally hundreds of partners committed to making mobile commerce a reality,” said an Isis spokesman. “Additionally, we’ve found that 1) the technology works, 2) it’s possible to align partners and create a scalable ecosystem and 3) consumers are ready and will adopt mobile commerce.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York