Microsoft is attracting interest in multiple countries for its collaboration with FreedomPay, which enables banks and large businesses to use consumer purchasing data for targeted offers.

"Payments is transitioning from a transaction business to an information business – information about where people shop and how much they spend is extremely valuable," says Colin Kerr, industry solutions director on the worldwide banking team at Microsoft.

Microsoft is building a payments platform as a service, utilizing FreedomPay's mobile or card-based payments processing and portal to create offers. The partnership launched in September, and although Kerr would not name any bank or merchant clients, he says, "there's been very substantial interest in North America as well as the Netherlands and the U.K.," as well as Mexico.

Banks are trying to solve a loyalty problem, preventing consumers from losing their trust in big banks and switching their accounts. It's more expensive for banks to sign up new customers than it is to keep existing ones, Kerr says.  "If the bank is able to connect consumer customers to its business customers and start to…become more influential in the spending chain," it'll be able to keep its relationships, he says.

Microsoft chose FreedomPay because it was already leveraging Microsoft's cloud technology for its offers and promotions platform and developing for Windows Phone 8, Kerr says.  Microsoft can cross-sell other products, such as business intelligence and customer relationship management tools, to FreedomPay merchants.

In July, Rodney Bowen-Wright, a former Microsoft venture capitalist specialist, joined FreedomPay as its chief business development officer.

FreedomPay tested the Vibe mobile wallet, its consumer-facing product, in St. Louis earlier this year. "That pilot gave us the ability to tell the story about our platform with a real live example," said Andrea W. Waldin
FreedomPay's vice president of marketing, in an email. With the backing of Microsoft FreedomPay is now focusing on white-labeling our solution to retailers, banks, and consortiums to create their own payment ecosystems."

A West-Mex fast food chain, Taco John's, started using FreedomPay's platform in June.

Microsoft has experimented with many technologies for payments. It also supported a digital currency, Microsoft Points, which were used by Xbox owners but scrapped in August in preparation for the next-generation Xbox One gaming console. Microsoft has tested a Zero-Effort Payments (ZEP) system, which used Bluetooth low energy technology for wireless payments, and works with Fortumo, which specializes in mobile carrier billing.

These initiatives indicate that "we want to be an innovation enabler in the payments value chain," Kerr says. "We take technologies that we have developed on the payment platform as a service…and make those available so they can innovate."

Microsoft will make money by charging for technology services used by mutual customers, Kerr says. 

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