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Isis starts out with some significant advantages, not the least of which are the tens of million of consumer accounts claimed by its telecom owners and the merchant reach built up by Discover’s network, which with 7 million locations now nearly rivals those of Visa and MasterCard. But the new company will still need to induce merchants to accept Isis, most especially the big-box chains that can help build volumes quickly. Here, the appointment of Abbott as chief executive of Isis may prove shrewd, given his experience at GE Capital in working with merchant card programs, observers say. “He has relationships with the very largest retailers,” says Todd Ablowitz, president of Double Diamond Group, a consulting firm in Centennial, Colo.

Those relationships may be tested in the weeks to come. Sources have told Digital Transactions News that the venture’s merchant-fee structure has so far struck merchants as offering little or no advantage over the rates they pay for Visa and MasterCard transactions. “For the carriers to be tone deaf [to merchant fees] was a shocking miss,” says Ablowitz. “I’d expect [Abbott] to understand that. I’d expect somebody with his moxie to get the strategy right.”

Digital Transactions News, November 16, 2010