Isis CTO accuses U.S. retailers of turning off NFC and smartcard payment tech

Matt Hamblen

MCX's plans for barcode scanning by dozens of large retailers leave Isis in a "difficult position," McKee added.

Another factor that's expected to hurt Isis was Google's adoption of Host Card Emulation technology in Android 4.4 (KitKat) last year, McKee said.

Google's approach with HCE means that mobile payment security can be kept in the cloud, while Isis believes the secure element is best kept on a chip in the phone. Mulloy at Isis said both technologies can co-exist. Both HCE in KitKat and hardware-based security with Isis "are complimentary solutions," he said.

But McKee said while HCE will increase use of NFC, it's "a very bad thing for Isis, and just proves that operators are not a necessary component for a consumer wallet."

Overall, McKee said the situation for Isis is growing more dire. "It seems like they've run out their leash as far as they can, and they need something to happen or they have to re-evaluate," he said. Isis won't even say how many smartphone owners have loaded the Isis app, he said.

Meanwhile, Isis said it is encouraged by the support for Isis on 60 smartphones sold by AT&T, T-Mobile and Verizon. The Galaxy S5 announced in February is also Isis-ready. Isis users are tapping to pay up to seven times a month, Isis said.

While McKee expects Google's HCE innovation to lead to an NFC renaissance in 2014, the general assessment of NFC for mobile payments is not promising. In 2013, NFC transactions in the U.S. reached just $188 million, a "minimal" volume, according to Yankee Group.

"Generally, NFC payments are performing well below expectations in the U.S., especially given [that] nearly every major non-Apple smartphone supports NFC," said analyst Patrick Moorhead, of Moor Insight & Strategy. "The biggest issue is the [inconsistency] in the experience. Unlike credit and debit cards that are accepted everywhere, NFC payments are only available at a small portion of overall stores and the checkout experience varies from store to store. This is a killer for consumers."

Jack Gold, an analyst at J. Gold Associates, said Apple's lack of NFC support has had a major impact on slow NFC smartphone use. "NFC is barely having a dent in sales in the U.S.," he said. "I'd venture to say that if you asked the average consumer about NFC they wouldn't even know what it is."

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