Some major wireless companies are betting big on mobile payments and they are about to find out if their gamble will pay off.
AT&T, Verizon Wireless and T-Mobile joined forces in 2010 to found Isis, a mobile wallet company that is launching its mobile payment app on Monday. The new app, enabled by near field technology (NFC), allows consumers to pay by tapping their smartphone to a payment terminal.
While other NFC payment services have not gained much traction, Isis is likely to be different because major wireless carriers are working together to launch the mobile wallet, said Aaron McPherson, the practice director for IDC Financial Insights.
"Isis is probably the favorite for NFC mobile payments because they have the market power to push it out there," he said. "Definitely, they are going to make a difference."
The app allows users to link their debit and credit cards to the mobile wallet so that they can pay by tapping their phone, instead of using their credit card. It also allows consumers to organize their loyalty cards in the mobile app so that points and rewards are automatically applied when making a purchase with the application.
The mobile wallet is only launching in Austin, Texas, and Salt Lake City, Utah, for now, but with the mobile payment market on the rise, it is not surprising that the company ultimately aims to grow its service nationwide.
Gartner estimates that mobile payment transactions will total $171.5 billion this year worldwide and by 2016 the research firm sees the market surging to $617 billion with 448 million users globally.
Isis is trying to tap into this expected growth, but first consumers need mobile devices that are equipped to make contactless payments possible. Isis is promising to fix this problem.
By the end of the year, there will be as many as 20 Isis ready handsets on the market, Jaymee Johnson, the head of marketing for Isis said in a statement.
Isis announced in 2011 that phone makers, including HTC, LG, RIM, Samsung Mobile, Sony Ericsson and Google owned Motorola Mobility would introduce smartphones that are NFC enabled, which is the technology that allows communication between devices to share information by tapping them together.
It was speculated that Apple would include NFC technology in the iPhone 5, which launched in September, but the tech giant rolled out the new smartphone without the special chip that makes NFC possible.
The mobile wallet is compatible with cards from JPMorgan Chase, Capital One and American Express .
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