On Tuesday it was widely reported that Verizon Wireless decided to block Google from putting its Google Wallet mobile payments app into their Galaxy Nexus phone, which launches this month. Verizon Wireless told the Wall Street Journal that they decided to block the app over security concerns, and that the conversation with Google is not over just yet.
But in the background to this story is Verizon’s own plans for mobile payments; AT&T, T-Mobile and Verizon have teamed up to create a mobile platform of their own, Isis. Like Google Wallet, Isis would use NFC technology which would allow users to simply wave or tap their phones to a special reader to pay for goods and services.
Isis also announced partnerships with Visa, American Express, Discover, and MasterCard this past summer. They have the blessing of the vast majority of the credit card/electronic payments industry, in other words.
Mobile is a Massive, Growing Market
And mobile payments have the potential to be huge. According to Yankee Group, a research firm that specializes in mobile technologies, by 2015, mobile payments will account for $1 trillion in transactions! Other have estimated a bit more modestly; Juniper Research, another mobile-focused research group, estimates that by 2015 mobile payments will account for $680 billion in transactions. The same study by Juniper Research claims that mobile payments this year alone amounted to $240 billion.
Along with all this spending — and projected growth — comes a whole lot of data on consumer behavior. There is a huge opportunity here for whoever gets to collect this data on consumer spending: will it be online ad giant Google? Or will Isis get access to it? The promise of mobile payments is that merchants will be able to buy hyper-targeted ads and deals for customers, and whoever has the real-time spending data will be able to make a great deal of money off of this.
What If Isis Were a Cartel?
While Verizon claims that their concerns about Google Wallet are strictly hardware and security related, it’s hard not to suspect that having access to a rapidly-growing data-rich market might have something to do with it. One would like to come out on top, and it seems that Isis, despite not being a fan-favorite, might be poised to do so. It might not be popular right now — no one really knows what it’s like — but it has the backing of both the credit card industry and the wireless carriers.
And as Verizon demonstrated this week, if they don’t want your mobile payments platform on their phones, they don’t have to let it happen (for whatever reason). If you think we’re being overly conspiratorial, consider whether you think that credit card and telecom industry behaves in a fair, competitive fashion. Take a look at this chart of the telecom industry’s mergers over the last few decades, and consider how difficult it would be for the industry to pull something like this off.
In other words: we’re not saying, but we’re just saying.