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Startup Does Mobile Payments–Without The Payments

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A startup is attempting to create a mobile-payment system that focuses on digital receipts and rewards. And it leaves payments out of the process.

Proximiant Inc. of Mountain View, Calif., launched a mobile loyalty service in December that pushes digital receipts to a smartphone application after the users makes a payment through separate means. The company has signed on at least a dozen retailers since its launch in March.

As a part of those deals with retailers, Proximiant provides a stand-alone Near Field Communication reader to merchants that allows users to wirelessly receive receipts on their smartphones.

The reader works with NFC-equipped smartphones or, in the case of non-NFC phones such as the Apple Inc. iPhone, it uses a keychain-sized NFC tag the users can link to an app on the phone. The digital receipt displays transaction details as well as coupons and ads the user can tap to view.

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"It's different than payment terminals that are reading credentials from your phone," says Fang Cheng, Proximiant's co-founder and chief executive. "Instead of just reading … your card information and then processing it, it's the other way around."

Digital receipts provide a way for consumers to track rewards and for retailers to target customers, Cheng says. The technology allows stores to target offers to consumers based on their location and transaction history.

Early adopters of the Proximiant system have reacted enthusiastically, she says. There are only 1,200 registered active users, but "in the first two weeks we got $1,500 worth of loyalty rewards" offered through the Proximiant system, she says.

Analysts, however, are not convinced a stand-alone device can compete at the point of sale. Terminal makers such as VeriFone Systems Inc. and Ingenico SA are promoting integrated devices for reading wireless and chip card payments.

"It's a tough space to break into, and I think ultimately the solution that is going to win is probably going to be integrated," says Rick Oglesby, a senior analyst at Aite Group LLC. "I doubt that separate hardware just for receipts is going to win when it can be handled by an NFC-capable device."

Instead of compete head-on with large point-of-sale technology companies, Proximiant is in talks with a "major" terminal maker about a partnership, Cheng said.

Another approach Proximiant might pursue is to seek to be purchased outright for the value of its patents, says Brian Riley, a research director in the bank cards practice at TowerGroup.

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