March is coming in like a lion in the world of mobile payments!
When PayPal announced it was splitting off from parent company eBay in the closing days of September 2014, the payments ecosystem seemed to collectively offer a variety of opinions on a single question – “Now what?”
Today, it looks like the ecosystem may be getting one piece of its answer. PayPal has announced its intention to acquire Paydiant, a white-label, cloud-based mobile wallet platform for retailers, banks and payment processors (as well as cardless ATM access). According to sources cited by re/code, the purchase price will be $280 million.
Paydiant’s platform allows its partners to integrate technology agnostic, complete mobile wallet capabilities into their own mobile apps.
Paydiant made a big splash at Innovation Project 2014, where it took home two awards in the Most Invisible Player and Best Cash Innovation categories. Since it was founded in 2010, the firm has taken in about $35 million in three rounds of funding, all raised out of the same five investors.
It’s also signed onto some fairly high profile partnerships providing the backend mobile wallet services for (Kroger-owned) Harris Teeter, Subway, Capital One, FIS, Barclaycard and Vantiv – just to name a few.
Paydiant’s highest profile partnership is with MCX – the backers of the merchant centric CurrentC mobile wallet. Almost exactly one year ago, MCX signed a deal with Paydiant to integrate its white-label, cloud-based platform with MCX’s mobile commerce system. CurrentC has struggled to get off the ground, with rumors circulating that some of its heaviest hitter members would be leaving given the restrictive nature of its contracts. Those contracts prohibit CurrentC members from offering any mobile payments solution other than its own, which has created lots of friction from members who wish to support Apple Pay.
"Mobile payments and offers are a critical customer touch point for merchant brands,” said Kevin Laracey, CEO and Founder of Paydiant, at the time the MCX pair-up was announced. “We are looking forward to working with MCX to remove the primary obstacles that retailers can face when adopting a mobile payments infrastructure by providing members with greater control over the customer experience. As a result, merchants can engage their customers with the convenience of mobile payments along with personalized offers, promotions and programs that build customer loyalty and increase share of wallet."
What remains a question is whether “MCX” as a brand will exist going forward since MCX was the Paydiant solution wrapped around a brand called CurrentC. With control of the Paydiant assets and merchant relationships, PayPal is well positioned to deliver a merchant-friendly solution to MCX members without the contractual shenanigans that have frustrated MCX merchants in the past. PayPal can also work with its members to get a merchant solution in market quickly, including one that enables the use of their own private label cards in consumer PayPal wallets and provides a robust set of capabilities including transactional credit and mPOS solutions.
From our perch, it appears that the acquisition of Paydiant will mean the death of MCX but the birth of a brand new merchant-friendly mobile alternative that can offer merchants exactly what they had hoped to get from MCX plus a whole lot more – including access to 180+ million registered PayPal accountholders.
Brad Brodigan, GM of Retail, spoke with MPD CEO Karen Webster a couple of weeks back about its POS/Retail strategy. During that discussion, Brodigan hinted at a series of things that PayPal would be doing to drive its POS/retail strategy forward.
Watch this space for an exclusive interview tomorrow with PayPal and Paydiant executives on what this acquisition means for merchant and consumers. Braintree CEO Bill Ready and Paydiant Co-Founder Chris Gardner are also speaking at The Innovation Project 2015 March 18 – 19 and will provide additional points of view on the impact of a PayPal/Paydiant matchup at that time.