The Pulse debit and ATM network is working with mobile payment provider Paydiant to give banks a software-based mobile wallet with the bank's brand.

Currently, many mobile payment applications come from third parties, meaning banks put their cards "in somebody else's wallet," says Douglas Hartung, head of emerging products for Discover's Houston-based Pulse network.

Pulse and Paydiant, which provides cloud-based mobile wallet and redemption programs, will offer Pulse network banks a cloud-based mobile payment option for use at their merchant clientsÂ’ point of sale terminals, the companies announced Aug. 1.

Pulse merchants will be able to accept Paydiant wallet on their current point of sale systems through just a software update, a factor that was appealing to Pulse, Hartung says. Many available mobile wallet systems require new hardware for both merchants and consumers, he adds.

"We were excited that this would allow merchants to use existing infrastructure, because it addresses what has curtailed mobile wallet adoption to this point," Hartung says.

Paydiant's mobile wallet software operates on iPhone and Android handsets.

Pulse and Paydiant's approach is "a great step for getting issuers on board with a cloud-based wallet," says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.

Banks that experiment in mobile payments face the challenge of establishing a widespread merchant acceptance network, Ablowitz says. "I am sure we will see efforts in that area going forward," he adds.

The Paydiant software allows merchants to support any Paydiant-powered mobile wallet, whether a bank, retailer or third-party service provider initiates it.

The banks will determine which payment cards the branded wallet will support and how it will operate to withdraw cash from a Pulse ATM, while merchants will decide how customers can make payments at the point of sale and redeem offers through the cloud-based service.

The Paydiant mobile wallet app does not store sensitive account data on the mobile phone handset or pass that data through the retailer's system. Every transaction uses two-factor authentication and tokenization, the companies say.

Banks using Paydiant's software development kit can create a separate mobile application for enrollment, or the banks could present the mobile payment feature as part of an existing mobile banking app, Hartung says.

"I am not a big fan of the term 'wallet' as a metaphor, because mobile pay can be a part of mobile banking," Hartung says.

Pulse plans to begin working with banks to set up the mobile payment system over the next few months, Hartung says.

"Most of the financial institutions will start with internal trials with employees and then broaden it to their merchant customers," Hartung says.

Meanwhile, Pulse and Paydiant will test new features as their first clients provide feedback, he says.

Paydiant views the Pulse debit network's open approach to mobile payments as a means to spur mobile wallet adoption.

"Pulse is positioned to connect all the key constituents in mobile payments," Kevin Laracey, co-founder of Wellesley, Mass.-based Paydiant, states in a press release. "They have an outstanding reputation as a trusted and reliable partner to both financial institutions and retailers for delivering secure payment services." 

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