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

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Seamless Distribution AB said it believes it has developed a mobile payment method that replaces the need to shop with credit and debit cards, thus saving money for merchants who no longer would have to pay card-related fees.

Seamless is awaiting patent approval for its SEQR mobile pay application, which enables clerks to scan a barcode displayed on a mobile phone screen to authorize a payment drawn from the customer's bank account, the Stockholm, Sweden, company said.

Cash registers supplied with 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 withdrawal through the application, Seamless said.

Company 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, Peter Fredell, Seamless's CEO, said in a Nov. 29 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 said.

"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 company 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 senior analyst in London for the research firm Celent, told PaymentsSource.

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

"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 said.

Starbucks Corp. last 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 said.

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 said.

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

Seamless filed patent applications for the mobile payment software in Europe and the U.S. on Oct. 12, the company said.

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