Fiserv, Visa and Samsung bring massive scale to mobile POS

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The large payment processor mergers from earlier this year were meant to give bigger companies a better way to compete against the nimble startups that were luring their customers away for digital services such as mobile point of sale.

And post-merger, Fiserv and First Data have fired their first salvo.

The combined company teamed with Samsung and Visa to lure merchants with a software-based contactless payment option for smartphones. The companies are betting enough merchants have smartphones or tablets with NFC technology to entice a move away from dongles or other card-reader attachments that connect to phones via the headphone jack or bluetooth.

Combing issuer technology with merchant technology to quickly deploy contactless payments is precisely the sort of benefit the large bank technology firms hoped to achieve when they began pairing up earlier this year.

When Fiserv announced its $22 billion deal to acquire First Data, it picked up a company that could add a diversifying range of merchant technology to accompany Fiserv's gigantic base of card-issuing financial services clients.

First Data has been adding merchant technology for years under KKR's private equity ownership between 2007 and First Data's IPO in 2015, incrementally adding merchant technology to its Clover point of sale system. This kept it competitive with disruptors like Square and Stripe — which have also been diversifying to keep rivals at bay.

Square in August announced a new set of application programming interfaces and software development kits for developers to build functions that can be customized to specific merchants to sell activities beyond payments. This move is designed to broaden Square's appeal to larger merchants, creating a greater competitive threat to incumbent providers such as First Data. Stripe has added tools for dispute resolution and identity risk to sweeten its pitch to merchants.

Called SoftPOS, the Visa/First Data/Samsung system will pull from all three companies. Visa's contactless technology will support acceptance, Fiserv will power settlement through a mobile app, and Samsung Electronics and Samsung Knox will provide security protocols and mobile technology.

Contactless payments will be possible an any device with NFC, including phones, wearables and key fobs. A pilot will start in Poland by the end of the year and will expand to EMEA and APAC regions shortly after. The companies chose Poland because of its high rate of contactless adoption, according to a release. Visa and Fiserv did not return requests for comment by deadline on Monday.

Contactless payments have lagged, but there are signs of ongoing adoption. Amex began rolling out contactless cards this year, along with major banks such as JPMorgan Chase and Wells Fargo. Bank of America has also begun issuing contactless cards, at a faster pace than the other large banks, which are moving cards incrementally. Visa has additionally pushed EMV standards for merchants that accept contactless payments, providing big-brand scale for contactless transactions.

On the ground, contactless is accelerating as an option for transit ticketing, fast enough to create potential demand for merchants, which may find the technology moving too fast to keep up.

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