If Seamless Distribution AB is going to pitch U.S. merchants on being able to duplicate the successful Starbucks mobile payment experience at their businesses, its new relationship with prepaid product provider InComm potentially provides a significant boost.
The Sweden-based mobile payments company's agreement with Atlanta-based InComm marks the first time Seamless taps the U.S. market with its SEQR mobile wallet, says Ingrid Lindstrom, executive vice president at Seamless. With InComm choosing Seamless as its mobile wallet provider, consumers will be able to store digital closed-loop reloadable cards into the SEQR wallet.
Seamless comes into the U.S. market with plenty of experience with prepaid products in Sweden and other parts of Europe, Lindstrom says. "Seamless provides electronic vouchers such as prepaid top-up that are distributed and sold at retail and grocery stores," she says, adding Seamless provides the technology for bank customers in Sweden to top-up prepaid phone cards through online banking.
All of that experience will come in handy as Seamless and InComm try to lure merchant clients with an offer that will look similar to Starbucks' popular mobile prepaid loyalty program. From the start, the companies will have InComm's base of 500 brand partners in the U.S. for which it supplies stored-value cards.
When those cards are digitized and stored in the SEQR wallet, merchants will have a reloadable closed-loop loyalty card for its customers at a low transaction cost.
"InComm is desperate for a mobile solution because mobile can be most disruptive in the private-labeled prepaid debit space," says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
InComm engaged in a similar partnership three years ago with CoreFire to establish a mobile commerce platform.
It is unclear if that partnership resulted in any products, but CoreFire is not currently listed as a partner on the InComm website, and InComm did not respond to inquiries from PaymentsSource.
However, InComm did launch a mobile platform in May, allowing merchant and issuer systems to integrate and enable NFC based mobile payments at the point of sale.
Such a development likely made it easier for Seamless to integrate its SEQR wallet, which calls for consumers to initiate transactions through a QR code or Near Field Communication chip scan and a PIN.
"The poster child for this type of private label card is Target's Redcard, and the others are Starbucks and Dunkin' Donuts," Crone says. "That's the target that InComm and Seamless are aiming at."
Seamless also knows that prepaid loyalty has to be offered through mobile technology because it offers better security than a card-based program, Crone adds.
"You are not going to put $500 on a physical prepaid card that is treated just like cash, because if you lose that card, you lose the cash," Crone says. "But if you had a mobile wallet that was secure and had strong authentication, then you have a secure offering linked to loyalty."
The SEQR wallet works equally well in e-commerce and physical stores, Lindstrom says. But the InComm agreement allows the companies to play a role in the increased competition between stores and restaurants for customer loyalty, she adds.
"Everybody needs to work strategically with loyalty building activities, so our partnership works just as well for a retail store, café or fast food chain, Lindstrom says.
Seamless chose an ideal partner to strengthen its first move into the U.S. market with its SEQR mobile wallet, says Richard Oglesby, senior analyst at Double Diamond Payments Research. "It's a really good pairing, when looking at what each brings to the table."
It doesn't matter that Seamless doesn't have a brand in the U.S., Oglesby says. "The reality is that by going closed-loop they are going to ride the brand of the merchant and get the merchants to push it, and that makes a lot of sense," Oglesby says.
InComm has a lot of merchants already set up for prepaid transactions, so it will be easier for the companies to integrate mobile into the current POS infrastructure, Oglesby adds.
Consumers should find the SEQR mobile wallet easy to use after entering the details of their physical prepaid or gift card into the SEQR application, Lindstrom says.
The application digitally stores the card as a reloadable source of funds. Consumers can add other cards purchased at stores or off websites.
"The consumer simply opens the SEQR wallet and by the touch of a button can see the cards and select the source of funds they want to use for payments," Lindstrom says.
Ultimately, Seamless looks to expand upon its current volume of handling more than 3.1 billion transactions annually in 30 countries.
"This is all focusing on a Starbucks-like solution, so the wallet will really be in the background," Oglesby says.