Sweden's Seamless Eyes Mobile-Pay Plan To Bypass Cards

Stockholm, Sweden-based Seamless awaits patent approval for its SEQR mobile-pay application, which enables clerks to scan a barcode displayed on a mobile-phone screen to authorize payment drawn from the customer's bank account, the company stated in a press release.

Cash registers supplied with the Seamless software send the sale total directly to the customer's mobile phone. The customer enters a four-digit PIN on the phone to authorize the account withdraw through the application, the press release stated.

Seamless officials could not be reached to comment about the software initiative or to provide details about which mobile phones could accept the software after its patent approval.

The entire process of paying through the mobile phone takes half the time of a standard credit card payment, Seamless CEO Peter Fredell stated in the press release.

In that process, merchants send the consumer's item list and sale amount to the "transaction switch" of the SEQR software.

After the consumer scans a barcode sticker merchants attach to each cash register, identifying that register with a mobile phone, he is prompted to tap a button on the phone to send the information to the SEQR software, which confirms the cash register and sends the sale information to the consumer's phone for authorization. Banks verify the information, confirm funds are available, and process the transaction, the Seamless website states.

"If we imagine that all retailers in the U.S. started using SEQR, the total savings could be as high as $24 billion each year, and this demonstrates the massive potential of SEQR," Fredell said. The release did not say how much merchants would pay for Seamless' transactions.

The mobile-pay system would provide significant savings for retail and grocery businesses because they pay high fees to credit card companies and often have to invest in new payment terminals each time a new standard is introduced, Fredell said.

Seamless' mobile-pay plan is not the first, nor will it be the last, trying to replace a card account with a bank account for retail payments, Zil Bareisis, a London-based senior analyst for research firm Celent, tells PaymentsSource.

Seamless is likely to face many challenges once the software is on the market, Bareisis suggests.

"One of the challenges faced by many such mobile-payment plans in the past was payment guarantee to the merchant who takes on the risk of funds not being available during settlement," Bareisis suggests.

Starbucks Corp. this week expanded into Europe its closed-loop mobile-pay service, which also relies on barcode scans.

Seamless' software supports a multimerchant scheme, and that will present a significant task for mass acceptance, Bareisis contends.

Unlike four-party networks, such as Visa Inc. and MasterCard Worldwide, which rely on their member issuing and acquiring banks to attract cardholders and merchants into the system, Seamless would have to build its own network, Bareisis says.

Bareisis wonders how Seamless will convince banks to participate in the system "if the premise is built around cannibalizing the banks' revenues from cards."