Verizon Invests in Mobile Loyalty Program Outfit CardStar

By Paula Bernier August 23, 2010

Verizon reportedly has put $400,000 into CardStar. The move is the service provider’s latest move into the area of mobile commerce.

The investment in the Boston-based outfit, which offers an app that enables Android, BlackBerry and iPhone devices to store membership cards in one place, was made by Verizon Venture, the VC arm of the carrier. Verizon’s idea with this effort is to blend reward programs with the digital wallet and mobility technology.

This idea is garnering quite a lot of interest – and dollars – as of late. Indeed, as reported by TechZone360 just last week, MasterCard plans to buy European payment provider DataCash for $520 million.

MasterCard’s plan is to “expand DataCash’s platform and launch MasterCard’s new generation of e-commerce, mobile commerce and other payment products, enabling merchants to quickly accept these new forms of payments with minimal integration challenges.”

The deal announcement followed news from MasterCard in late May that it is inviting developers to use its payment technology in third-pay applications and on cellular phones.

“You’re seeing quite different ways people are paying for digital goods, but you haven’t really seen that translate into physical goods,” Josh Peirez, MasterCard’s chief innovation officer, says. “It’s still really hard to buy a physical item from your phone.”

Of course, MasterCard is just one of several companies working to grab share in the mobile payment space, which is forecast to be a $633 billion opportunity by 2014.

PayPal, for example, is planning to unveil this October software related to digital wallet application, as discussed in a TechZone360 piece posted earlier this month.

And, as discussed in the July issue of INTERNET TELEPHONY magazine, PayPal wants to make it easier for software developers to create applications using its payment engine. About 30,000 developers already are working on such apps.

Meanwhile, PayPal recently released a new Send Money application for the iPhone. Version 2.0 of the PayPal Send Money app offers users secure mobile access to their money and other helpful features. Using Bump, users can put two iPhones together to transfer funds quickly between their PayPal accounts. This, for example, could enable two users to split the cost of a shared meal. Collect Money is a way to allow people to collect funds from a group, such as taking up a collection to buy a teacher an end-of-the-school-year thank you gift.

And in mid May, DeviceFidelity Inc. made available its In2Pay solution for the iPhone. The application lets iPhone users buy stuff by waving a specially-equipped iPhone in front of a contactless payment terminal. The solution involves placing the DeviceFidelity product into a special protective iPhone case. Visa has collaborated with DeviceFidelity to combine its own contactless payment technology, known as Visa payWave, with the solution.

“Visa is working to bring the security and convenience of digital currency to mobile users around the world,” says Dave Wentker, head of mobile contactless payments at Visa. “Our collaboration with DeviceFidelity can extend the reach of Visa mobile payments to millions of iPhone users.”

While the idea of using a mobile device to make payments at retail institutions and to do banking remains a new idea here in the U.S. (at least to those outside the communications and payment industries), where it has yet to see widespread acceptance, it’s much more popular abroad. About 8.5 million people in the Philippines and 4.5 million in South Africa use mobile banking today. And that’s expected to grow over time.

“One billion consumers in the world have a mobile phone but no access to a bank account,” says Gavin Krugel, director of mobile banking strategy at GSM Association.




Edited by Erin Harrison

Executive Editor, IP Communications Magazines

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