Welcome to our new Payments Insights newsletter, a morning email with the top news and analysis on the digital payments industry, produced by BI Intelligence.
PAYMENTS CONSOLIDATION IN EUROPE TO CREATE A PAYPAL RIVAL THAT SERVES 43K MERCHANTS: Klarna, a Sweden-based online payments company recently valued at $US1 billion, announced the acquisition of a German competitor, SOFORT.
Together the two companies will be the largest independent online payments service in Europe. Combined, the companies serve over 43,000 merchants and 25 million users in 14 European countries.
Sources close to the deal say that acquisition was in the ballpark of $US150 million, according to the New York Times.
BOTH COMPANIES OFFER PAYPAL-LIKE SERVICES: Klarna allows customers to buy goods online and pay for them later (similar to PayPal’s Bill Me Later service). The company primarily operates in Nordic countries. SOFORT’s service allows customers to pay for their e-commerce purchases instantly online by deducting the amount from their checking accounts. The company has a firm grasp on the Western European market, particularly in Germany.
THE COMPANIES AIM TO LEAD THE EUROPEAN MARKET: The structure of the deal looks like more of a partnership. The two companies plan to continue to operate as stand-alone businesses, retaining their products and using separate brands.
The point of the deal is to consolidate control in Europe to compete more effectively against European players like Sage and fend off global payments companies that are looking to extend their reach in European markets. A particular example — earlier this year PayPal announced that it would begin to sell PayPal Here, its mobile card reader, in the U.K., PayPal’s second largest market with over 18 million customers.
“We believe this newly established group has … an enormous potential to emerge as a leading European provider of online payments,” said Dr. Michael Riemenschneider, SOFORT’s chairman.
It’s also worth noting that both Klarna and SOFORT offer services that allow customers to avoid using credit card payments, which puts them in direct competition with credit card networks like Visa. (Klarna)
In other news…
India works towards financial inclusion with biometrics: A big problem for payments in India is that the country doesn’t have strong public records which can make it difficult for Indians to buy SIM cards and open bank accounts. The Unique Identification Authority of India (UIDAI) is changing that by building a record of citizens in India based on their biometric data. The UIDAI has already issued over half a billion identifiers. This is a huge step towards opening up the payments market in India (PYMNTS)
Mozido Announced that it would start offering a peer-to-peer proximity payments service for mobile users. The service allows users to transfer funds to people in their immediate proximity using the Low Energy Bluetooth communication standard. (Mozido)
CaixaBank, Spain’s third largest bank, announced a partnership with Visa Europe and mobile carriers Telefόnica, Orange, and Vodafone to offer NFC contactless mobile payments throughout Spain. Of the country’s 300,000 NFC point-of-sales, CaixaBank currently operates 110,000. (Visa Europe)
A new venture between MasterCard, eServGlobal and BICS aims to expand the market for mobile remittances. The venture, called HomeSend, already has contracts with mobile operators that will allow is to reach 1.2 billion subscribers and 300,000 cash agents. (MasterCard)
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The Indian mobile operator Tata Docomo will further expand its mobile remittance services, called mRupee, to 26 cities and over 4,000 retail outlet in India. It’s an mPesa competitor. (Information Week)
DISINTERMEDIATION FEARS: “In Aite’s annual survey of IT executives at large financial institutions, two sweet spots for IT spending are the digital wallet (and the fear of being disintermediated by competitors such as Square) and mobile banking, including tablet apps for consumers and small businesses …” (American Banker)
The FBI holds 144,000 Bitcoins (~$100 million): The government agency acquired this enormous share of Bitcoin after seizing Silkroad, a Bitcoin-based black market. (Wired)
PayPal’snew digital gifts store will start offering digital gift cards from global brands with the help of Epay, a division of Euronet Worldwide, Incorporated. The partnership will help PayPal expand its gift card offerings and Euronet Worldwide its reach in the U.K., U.S., and Germany. (Wall Street Journal)
Mobile Point-of-sale technology provider I Love Velvet has is reported to have acquired weXpay according to Mobile Payments Today. (Mobile Payments Today)
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