Fiserv Inc. announced three acquisitions this week, including its long-time partner for mobile banking.
Fiserv’s purchase of Mobile Commerce Ltd. puts the Atlanta-based company’s Mobile Pay platform under Fiserv’s control. Mobile Pay allows access to transaction details, bill payment and cash transfers through text messages and mobile applications.
“People are going to access what they want the way they want to do it, and we believe that owning a mobile platform today is very important,” says Jeffrey Yabuki, Fiserv’s president and chief executive.
Fiserv says there will be no layoffs as a result of the acquisition. Adam Clark, M-Com chief executive, will be joining Fiserv as part of the deal. Additional financial details of the move were not released.
Fiserv also bought the credit union service organization Credit Union On-Line Inc. and Maverick Network Solutions, a Wilmington, Del.-based company that provides prepaid and reward services. Fiserv did not disclose the financial details of any of its purchases, which all closed this week.
Bart Narter, a senior vice president with the market research firm Celent, says the M-Com purchase is a sign of Fiserv’s commitment to its approach to mobile banking. Fiserv developed its Mobile Money offering with M-Com in 2008.
“‘They said: ‘You know, mobile is important enough. Oh gosh, we are locked at the hip with M-Com. That’s the obvious way to go,’ ” Narter says.
In the short term, industry watchers say, the acquisition eliminates a revenue-sharing model that Fiserv was paying to M-Com as a part of its Mobile Money sales.
Already a majority of M-Com’s Mobile Pay sales were being generated through Fiserv.
“This gives [Fiserv] what they want and how they want it,” says George Tubin, senior research director at TowerGroup in Needham, Mass.
Integration around banking channels is important to Fiserv, Tubin says.
“The back-end systems [are] just absolutely critical in banking,” Tubin says, adding that “making sure all the channels access similar data sets and are presenting information in a similar way.”
However, there could be obstacles to the Mobile Money’s integration, says Tubin.
Fiserv is one of the largest vendors of its kind, and it could be difficult to integrate the multiple products they offer.
“Trying to get a new product into the mix, and making everything work together, is a challenge,” Tubin says.
The move fits with Fiserv’s long-term strategy, says Aaron McPherson, a research manager for payments at IDC Financial Insights.
Banks have yet to catch on to the idea of truly mobile platforms. They are afraid of opening themselves up to fraud. Because of these concerns, many banks simply offering watered-down mobile version of their web sites instead of mobile banking services that take full advantage of the capabilities of consumers’ handsets.
“I think part of the confusion is that most banks have not implemented mobile payments,” McPherson says. “There is a lot of bankers that would like to do more, but their lawyers are tapping them on the shoulder, saying: ‘Too risky.’ ”
Banks also do not want to overshadow other products, such as credit and debit cards, he says.
Regarding its other acquisitions, Yabuki says each serves different aspects of Fiserv’s long-term strategy.
“We bought these two to really bolster the value proposition that we can bring to the market,” he says, “and do it faster. By the very nature of our scale, we can just move things faster through the system.”
The Federal Reserve Board’s proposed 12-cent cap on debit interchange could make prepaid cards increasingly important for retail banks, and the Maverick purchase will help it serve banks’ needs, Yabuki says.
The Fed’s proposal will “serve as a catalyst for financial institutions to think about prepaid differently,” Yabuki says.
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