Seeing a major opportunity in the U.S. market, Monitise PLC and Clairmail Inc. on March 26 announced a merger deal in which they will cross-pollinate and cross-sell each other's technology in their respective markets.
London-based Monitise is a large mobile-payment technology provider in the United Kingdom with partnerships with Visa and Fidelity National Information Systems, or FIS. Rafael, Calif.-based Clairmail is the biggest provider of mobile-banking software to large U.S. banks.
Assuming the deal goes through, the two companies will have 33% of the top 50 U.S. banks as customers and a total of 300 bank customers. The two companies would have pro-forma combined revenues of $56 million at the end of 2011.
Both companies' executives stressed their philosophy of keeping banks at the heart of mobile-payment and mobile-commerce transactions.
"Banks will continue to play a major role in the way consumers interact with financial services on their mobile phone," Alastair Lukies, Monitise group chief executive, said during a conference call to discuss the deal. "We've seen an increasing level of interest in the inevitability of mobile payments, whether that be paying someone remotely from a mobile phone, sending money to someone in the same country or overseas, or making a payment at a point of sale terminal as Near Field Communication becomes more prevalent over time.”
Ultimately, consumers will make a mobile purchase from an advertisement on a billboard or in a magazine or a TV spot, or when getting an immediate offer from someone while in their store and being able to make that purchase using special offers, digital receipts, loyalty coupons and vouchers, he noted.
“Each one of these marketplaces is a substantial marketplace. However, it's our firm belief and the firm belief of our shareholders, our board and entire team that with the bank at the center, you need a bank-grade, interoperable platform to make this marketplace really work," Lukies said.
And the U.S. market is set to become "one of, if not the, largest mobile money marketplaces," he added.
Pete Daffern, Clairmail CEO, will continue to run the U.S. mobile-banking software company.
"The world of mobile banking is evolving very quickly to mobile payments, and mobile payments will evolve very quickly to mobile commerce," he said in a March 26 interview. "If I have a relationship with a bank, I'll probably want to pay for stuff using my mobile phone based on that relationship with the bank. When I've got all that, it then makes sense that when I'm walking into a store, the store can start making offers to me, and I can start paying for them using my phone … ."
Visa handles 65% of all global payment transactions, Daffern points out, so Monitise's relationship with Visa should propel it in the fledgling U.S. mobile-payment market. "Monitise's technology is absolutely right for the U.S. market; it's blessed by Visa," he says. "The standards Visa imposes on an organization are second to none."
A joint product roadmap has yet to be determined. The companies expect to close the deal, which is still subject to regulatory approval, by June 30.
Analysts generally are bullish on the merger plans.
"It's a sign of the increasing maturity of the mobile-payments landscape and indicative of just how hot the space is right now," says Nick Holland, senior analyst at Yankee Group. "Both Clairmail and Monitise have been around for several years, and the acquisition seems like a sensible blending of strengths."
David Albertazzi, senior analyst at Aite Group, sees the two companies as a good fit.
"The international success and presence of Monitise in terms of capability in mobile payments and commerce–they'll be able to leverage (that) in the U.S.," he says. "At the same time, Clairmail's banking experience and success among large U.S. banks will also be leveraged. The scale for both franchises will be interesting to see; the two product lines are fairly complementary."
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