Seamless' mobile payments system is currently available in only a few countries, but the Swedish company has its eyes set on quickly adding bigger markets.
"We have quite an aggressive land-grab plan for the next 12 months," says Peter Fredell, CEO of Seamless, whose mobile payments product, SEQR, is available in Sweden, Finland, Romania, Kuwait, Malaysia and Belgium.
Seamless is targeting the United Kingdom and the United States, and has partnered with retail technology company PCMS to quickly gain a foothold in these markets.
Other mobile payment companies try to quickly scale in new markets by attaching to a local expert; Powa, for example, recently sped its move into Asia by acquiring a local technology company, MPayMe.
In the case of Seamless, PCMS gives it access to large clients in the U.S. and U.K. such as Walgreens, Arcadia, Marks & Spencer, John Lewis, Waitrose and Waterstones. "We're not large enough to cover the whole world ourselves, and this partnership gives us the type of relationship that we want in these new markets," Fredell says.
Consumers use SEQR by using a smartphone camera to scan a QR code displayed at the point of sale, and then confirming the purchase amount by entering a PIN in the SEQR app, a model that's designed to minimize hardware upgrades for merchants. SEQR is an alternative to card networks, since it usually transfers the payments from the consumer's bank account directly to the merchant's bank account. Seamless also partners with third parties to offer a revolving credit line that resembles a credit card account.
"We don't route our transactions over the credit card networks. That gives us a lower material cost of payment," Fredell says, adding Seamless charges it merchants half of the merchant's card processing rate. It has entered into a revenue sharing agreement with PCMS as part of the new partnership.
The two companies will also collaborate on merchant acquiring, Fredell says.
"Mobile payments is not really about the mobile devices as much as it is a question of routing," Fredell says. "The mobile phone is a tool that allows you to route payments differently than the traditional card payments."
SEQR's clients include banks, pharmacies, hospitality businesses and fast food restaurants such as McDonald's. In Europe, Seamless takes advantage of SEPA, the Single European Payments Area, which standardizes protocols for interbank transfers and are in the process of being adopted across Europe.
By linking SEQR to a bank account, consumers perform a direct debit at the time of purchase at a much lower cost than credit or debit interchange, says Thad Peterson, a senior analyst at Aite Group.
In the U.S., the Automated Clearing House (ACH) transfers would provide similar savings, Peterson says.
"Linking to the customer's account through SEPA is not unlike linking a decoupled debit card, such as Target's RedCard, to a customer's checking account in the U.S. via ACH," Peterson says.
Seamless still has sales work ahead of it, says Zil Bareisis, a senior analyst at Celent. Its agreements with point of sale terminal and service providers such as PCMS and Payzone will make it easier to roll out the service to merchants, he says.
"Having said that, they still need to recruit consumers and convince them to set up their wallet app, a task usually requiring a significant investment," Bareisis says.