Phone Payments Attached To Your Credit Card Show Promise

Last week, there were was an announcement from a company called Isis, that wishes to add some technology to your cell phone in order to allow you to make payments. My first reaction to this news was to run screaming at the thought of my phone company attempting to collect payments on behalf of merchants. I first rang the alarm on this subject a few months ago, when Apple proposed such a system.  Later, I revisited this subject in the context of an example of phone companies practically encouraging merchants to fraudulently bill their customers.

Isis May Be Different

With a healthy dose of caution, I proceeded to investigate whether this is another fiasco in the making, or a potentially useful new feature. The problem I had is that all of the articles I found about this new system neglected to mention how the payments will be collected. They all describe the technical aspects of the near field technology interacting with merchant payment systems, but they don’t carry the process though to the conclusion where the user actually pays some entity for the cost of the transaction.  I was even surprised that  Isis’s own website lacked this crucial detail.

Isis Responds

I reached out to Isis and asked them for some clarification.  Laurel Edelman of Isis was kind enough to reply:

JS: I have read with interest your Apirl 6th press release announcing the trial of your payment system in Salt Lake City, Utah.  Could you please clarify how customers will make payments. Will the payments be billed by their mobile telephone provider?

LE: The Isis mobile wallet will sync with a person’s existing credit, debit or customer rewards accounts.

JS: What are the purchase protections that customers will be able to utilize?

LE: A mobile phone allows additional layers of security to be added to a payment, such as pass-code protection, unique security codes that change on every transaction and remote activation or deactivation of an account. All these measures protect consumers and make it very difficult for an unauthorized user to access the payment system.

Isis is investing in strong privacy and security measures that will be incorporated into its products and services. However, we’re unable to comment on specific product features at this point in time.

Conclusions

Thanks to the informative response from Isis, I am no longer scared of this new system. It certainly seems like users will have all of the protections that they currently expect from their credit cards. My only remaining concerns are from a practical standpoint.  At what point does using your phone become more convenient than your credit card? Certainly, if you carry around many cards, it will probably easier to access them with your phone than fishing through your wallet.  On the other hand, I don’t see unlocking your phone and waving it being any more convenient than swiping a card. Even still, there is the same near field technology in many credit cards, and I just don’t see people using it much.

As for security, everyone using such a system would have to password protect their credit card info, if not their phone itself. Currently, I enjoy using my phone without having to enter a password.  Furthermore, you will create a single point of failure that didn’t exist.  If you lost your wallet, you could still call someone for help.  If you lost your phone, you could at least pay for a phone call or other goods and services.  If your phone is your wallet, and it breaks or you loose it, you are completely out of luck.

Like any new technology, it will have to wait and see how it is implemented and used before passing judgment. At the very least, we can now be assured that, at least with the Isis system, we will never be asked to our telephone company billing us on behalf of merchants, and thank goodness for that.