Swedish mobile payments company Seamless has steadily diversified the range of contactless payment technologies it supports in the hopes that it will be able to provide an entry-level platform for any financial institution's mobile wallet strategy.
Seamless recently spent about $5 million to acquire MeaWallet, a Norwegian technology company that was already providing the technology behind SEQR, Seamless' own mobile wallet and point of sale app. Seamless hopes the deal will open a new business line where Seamless will sell MeaWallet's technology to institutions looking to quickly scale mobile payments.
"Every existing card issuer is going to have to issue virtual cards in the medium time future there is a large market for MEA and SEQR to offer the technology for them to do so," said Peter Fredell, CEO of the Stockholm-based Seamless.
Card companies such as ABNote have already used MeaWallet's technology to build an open-loop payments app. And Seamless has used MeaWallet to expand its contactless technology to accommodate changes in merchant acceptance.
SEQR initially focused on QR codes for its Cash Register app, an alternative to products such as Square Register and First Data's Clover. QR codes powered many early mobile payments initiatives since the software-based approach was considered more widely applicable than Near Field Communication. But as more merchants added NFC hardware, Seamless' reliance on QR codes became limiting, so the company added NFC payments late last year.
MeaWallet's technology also includes Host Card Emulation, a device-agnostic form of NFC that's considered a key component for banks and other payment companies to build their own mobile payments systems without relying on a specific handset manufacturer.
"We have really benefited from their technology and we trust them," Fredell said.
Seamless has also collaborated with companies such as GoCardless to give it a presence in the U.K.; Incomm to grow in the U.S. market and add prepaid capabilities; and Visita to give it an entry into hospitality payments.
The company has diversified geographically and technologically as banks face pressure to build their own contactless mobile payment systems to maintain control over branding and card position. Even large banks such as HSBC that have relied on third-party wallets are considering building their own; while Chase, Capital One and RBC have already committed to doing so.
A white label option has a lot of potential worldwide, according to Fredell.
"With Mastercard or Visa, paying them 20 basis points is a fair payment for being on their network … but Apple has blackmailed the banks by making them pay 15 basis points for transactions," Fredell said. This pricing pressure is a motivating factor for banks to develop their own wallet apps, Fredell said.
Other technology companies are also aware of this stress on banks and are targeting the bank wallet market. PayPal acquired Paydiant, a mobile wallet maker and the technology behind the Merchant Customer Exchange's merchant focused initiative, in part to own the tools necessary to developing new mobile payment systems.
"It would appear that the world is breaking into OEM wallet, pure digital wallets, retailer proprietary wallets and bank wallets," said Thad Peterson, a senior analyst at Aite Group. "There is real potential for white label wallet providers to support the retailers and banks."
The competition could be intense as traditional bank service providers such as Fiserv and FIS could compete with the likes of Seamless/MeaWallet and Omnypay, Peterson said, adding MeaWallet already offered a white label wallet product and Seamless benefits from its success in Europe and its attractiveness to merchants in the U.S. following its expansion to the States.
"While there hasn't necessarily been an explosion of activity around bank side mobile wallet apps, momentum appears to be building," Peterson said.