Gemalto will act as the bridge between mobile network operators AT&T Inc. (NYSE: T), Verizon Wireless and T-Mobile US Inc. and their financial partners Visa, MasterCard, American Express and Discover. The digital security company breaks down its role as a TSM in this nifty infographic, but essentially it is responsible for managing the secure element on Isis phones, housed in the SIM card. Gemalto doesn't execute the payments, but its infrastructure provides the credentials and security to complete payments, coupons or any secure mobile interaction.
Why this matters
Security is paramount for any mobile payments service. Sébastien Cano, SVP of telecom for Gemalto, says that its TSM solution is more secure than most credit cards in the U.S., but it's also up to the wireless operators to communicate that to their consumers. A perception of insecurity could be a big obstacle to the take-up of mobile payments.
Isis plans to go live with its service in the first half of 2012 with trials in Salt Lake City and Austin, Texas. It trails competitors such as Google (Nasdaq: GOOG), which is already deploying its Mobile Wallet with Sprint Corp. (NYSE: S), but it could also have some bearing on its competitors' success. (See Isis Heads to Salt Lake City.)
Cano believes that the secure element for NFC will predominantly be on SIM cards for the years to come, meaning that wireless operators will have a great deal of control over which NFC services ride on their network. (See Mobile Ops Unite to Keep NFC in the SIM.)
As an example, last week Verizon confirmed it would not integrate Google's service on the Android-based Nexus S. Cano doesn't have direct knowledge of Google Wallet, but he says that if it's compliant with global standards for NFC, it could technically run on Gemalto's TSM provided a commercial agreement was in place between Google and the wireless operators. The lack of a commercial agreement -- coupled with Verizon's desire to promote Isis -- is most likely the carrier's reason for excluding Google Wallet. (See Isis Heads to Salt Lake City and Verizon Blocking Google Wallet? Poor Decision.)
Isis is also a big win for Gemalto. The vendor already works with 45 partners across the globe, but Cano says this will be its biggest deployment to date. Interestingly, it also provides rumored NFC player Apple Inc. (Nasdaq: AAPL) with the SIM card in the iPhone 4, but Cano says the two are not currently working on an NFC service. (See Softbank Mobile Uses Gemalto, StarHub Trials NFC Mobile Payments, Nice Move for NFC, Gemalto, Orange Team on NFC and Apple's 'Soft-SIM': Not Too Useful in US.)
Catch up on the other components to the wireless operators' mobile wallet below.
- US Wireless Operators Spend Big on mCommerce
- Carriers Can't Take the Credit
- US Operators Partner Up for M-Banking
- Who's Holding Up NFC?
- US Carriers Combine Mobile Wallets
— Sarah Reedy, Senior Reporter, Light Reading Mobile